Since the attack of October 7, 2023, Israel has received unprecedented support from the United States and Western countries in its war against Gaza. Despite this, the repercussions of the war appear to have had profound negative effects on the economy.
According to the Central Bureau of Statistics, “The total cost of the war so far is estimated at about $95 billion, which represents about 18 percent of the annual gross domestic product, and the direct expenses of the war, military and civilian, are estimated at about NIS 180 billion ($48.37 billion) from the last quarter.” From 2023 until the end of 2024, leading to a large deficit in the 2024 budget estimated at about 8 percent of the GDP.”
According to statistics, “public debt and interest expenses increased, in addition to the rise in the costs of reserve mobilization and the consumption of ammunition, fuel, food, and spare parts.” In 2023 and 2024, the debt increased as a result of the high deficit due to the war by about 175 billion shekels ($47.02 billion), and by 2025, Israel will have to pay an additional 7 billion shekels ($1.88 billion) in interest expenses compared to 2024, and this is expected to reach The value will reach 10 billion shekels ($2.69 billion) in 2026.”
Estimates indicate that “the loss of gross domestic product from the beginning of the war until the end of 2024 will amount to about 17 billion dollars.” Ongoing expenditures for defense and civil services are estimated at $45 billion, while the cost of rehabilitating buildings, infrastructure, and small businesses is expected to reach $20 billion, and the cost of rehabilitating military equipment and replenishing stocks is estimated at $15 billion. As of September 2024, the war has resulted in the death of 1,630 soldiers and civilians, and the injury of about 6,000 people, and the costs of rehabilitating them and compensating their families are estimated at about 15 billion dollars.
According to the numbers, “the problems that Israel was suffering from before October 7 have worsened, such as lack of infrastructure, low productivity, and high housing prices.” The gross domestic product also contracted by 4.1 percent in the first weeks of the war, and the decline continued in 2024 with a decline of 1.1 percent and 1.4 percent in the first two quarters. The war also deeply affected certain sectors of the economy. The construction sector, which accounts for about 6.5 percent of GDP, slowed by nearly a third during the first two months of the war. Its activities were severely affected after about 100,000 Palestinian workers were prevented from entering Israel, and about 15,000 foreign workers returned to their countries.”
Projections show that “up to 60,000 Israeli companies may close in 2024 due to labor shortages, interruptions in supply chains, and declining business confidence, while many companies postpone their projects.” Foreign investment in the high-tech sector, which represents about 50 percent of Israel’s exports, also declined, prompting some companies to move abroad. Agriculture production also decreased by up to a quarter in some areas, which increased the need to import food, and small and micro businesses were affected. largely by war; The number of closed companies exceeded the number of new ones.”
In the tourism sector, the number of tourists has decreased dramatically; “One in ten hotels face the possibility of closure,” and according to the Central Statistics Office, “tourism has fallen by more than 75 percent.” Many foreign airline companies also suspended their flights, which affected air freight imports, and increased the cost of sea freight as a result of the high risks. As for the industry, it was also affected by the labor shortage due to the call-up of the reserve, with increased demand in the food, security and pharmaceutical industries sectors. Factories producing raw materials for the construction sector also suffered from a decline in demand, due to the cessation of work on construction sites.”
Last updated: October 6, 2024 – 18:26
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2024-10-07 13:31:28