ALBAWABA - Recent data from the Bank of Israel indicates that the ongoing military operations by Israel against Gaza, which are in their seventh month, have had a substantial negative impact on the economy of the nation.
Israel's operations in Gaza are anticipated to cost the country over 245 billion shekels ($67 billion), according to the most recent report, making it the most expensive battle in Israeli history.
Furthermore, according to a report published on March 31 by Fitch Ratings Agency, this amount does not account for losses brought on by Hezbollah-related unrest in northern Israel, which might significantly worsen the economic impact.
A prominent outcome of the battle has been the mobilization of reserve soldiers, which has led to a significant reduction in the labor force. The Yedioth Ahronoth newspaper says that the expense of mobilizing reserves on a daily basis came to over 600 million shekels during the peak call-up period that took place between November and January.
Significant property damage in Israeli settlements close to the Gaza border was reported last week by i24 News, with an estimated cost of 15-20 billion shekels. Furthermore, losses in northern towns estimated at 5-7 billion shekels have resulted from confrontations with Hezbollah.
The economic effect has been further compounded by the departure of nearly 178,000 Palestinian workers, mostly from essential industries such as construction, tourism, agriculture, and services. There is a 140,000 worker shortfall in the construction industry alone as a result of this labor loss, which has a big influence on building projects all around the nation.
In February, Moody's cut Israel's government credit ratings from A1 to A2, citing the protracted conflict's increasing economic risks. Geopolitical threats were also emphasized by Fitch Ratings Agency, which also forecast an increase in the debt-to-GDP ratio in the upcoming years.
According to data from the Statistics Office, the fighting caused the local economy to decrease by 20% in the fourth quarter of 2023. The substantial drop in investment levels and the dramatic loss in both public and private consumption are blamed for this collapse.
Israel's economy and financial stability face serious problems as a result of the ongoing conflict in Gaza and its growing economic repercussions.
