Israel is facing a daunting economic challenge as it continues to wage war against Hamas in Gaza. The conflict, which has claimed hundreds of lives and displaced thousands more, is also draining Israel’s financial resources and hurting its business prospects.
According to the Bank of Israel, the total cost of the Gaza conflict could exceed $54 billion between 2023 and 2025, accounting for both direct and indirect expenses. This includes military spending, humanitarian aid, infrastructure repair, and compensation for damages and losses.
Since October 7, when the conflict escalated, Israel has spent $6.6 billion on border security and assistance to over 100,000 people who have been forced to leave their homes, Israeli Channel 12 reported. The government has also announced a $1.6 billion economic stimulus package to support businesses and workers affected by the conflict.
However, these measures may not be enough to offset the long-term impact of the war on Israel’s economy. Reports cited experts who warned that the Gaza conflict could deter foreign investors and trade partners from doing business with Israel, especially in sectors such as tourism, technology, and agriculture.
The conflict could also affect consumer confidence and spending in Israel, as people become more cautious and frugal amid the uncertainty and violence. According to the reports, a decline in sales of luxury goods, such as jewelry, watches, and cars, as well as a drop in demand for entertainment and leisure services.
The Gaza conflict is not only a humanitarian and security crisis, but also an economic one. Israel is risking its economic stability and growth by pursuing a costly and protracted war that has no clear end in sight.