Israel's Economy: The High Price of Ongoing Conflict
Israel's Economic Challenges During the Conflict
As Israel's war widens, its economy is experiencing severe strain. Finance Minister Bezalel Smotrich acknowledged the situation on September 28, stating that Israel's economy 'bears the burden of the longest and most expensive war in the country’s history.'
Projected Economic Impact
Forecasts have drastically changed since the onset of the conflict. Initially projected to grow by 3.4% this year, the IMF now revises estimates to a mere 1% to 1.9%.
- Deficit Increases: The war has doubled Israel's budget deficit to 8% of GDP.
- Impact on GDP: The economy could contract by as much as 10% if escalations continue.
Long-Term Economic Damage
Economists warn of lasting economic repercussions. Flug's insights highlight concerns that military expenditure may lead to investment cuts, impairing future growth.
- Investor Confidence: Multiple downgrades from major credit rating agencies could raise borrowing costs.
- Business Closures: Estimates suggest that 60,000 Israeli firms may shut down this year.
While Smotrich expresses confidence in a bounce-back post-war, many doubt the resilience of the economy in the face of such uncertainty.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.