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Strategic Issues
Israeli newspapers have reported that the war on Gaza is going to be really expensive, costing more than 50 billion dollars! Let's find out more about it.
The Numbers
According to the Israeli economic newspaper Calcalist, the Ministry of Finance estimates that the war against Hamas will reach up to 200 billion shekels, which is equivalent to 51 billion dollars. That's a huge amount of money!
How Did They Calculate It?
Calcalist based their estimate on a few factors:
The war could last from 8 to 12 months, but only in Gaza and without the full participation of other groups like Lebanese Hezbollah, Iran, or Yemen.
They expect about 350,000 Israelis who were recruited into the reserve forces to return to work soon.
Half of the cost, around one billion shekels per day, will be spent on defense. Another 40 to 60 billion shekels will be lost in terms of revenue. Israel will also have to pay around 17 to 20 billion shekels as compensation to companies and 10 to 20 billion shekels for rehabilitation.
The Impact on the Economy
Yedioth Ahronoth, another Israeli newspaper, says that the Ministry of Finance believes the economy will not recover quickly after the war. They predict a major recession by 2024 due to increased spending on defense and security, and a decrease in revenues, compensation, and rehabilitation.
Help for Those Affected
The Finance Minister, Bezalel Smotrich, has promised that the government will provide a larger and broader economic aid package for those affected by the war. Prime Minister Benjamin Netanyahu also stated that the state is committed to helping everyone who needs it, even if it means economic losses for Israel.
The Consequences
The war has already had some consequences for Israel. Standard & Poor's, a rating agency, lowered Israel's rating outlook to negative. Other agencies like Moody's and Fitch are also considering downgrading Israel's ratings. The National Security Research Center in Tel Aviv warns that the war will have a long-term impact on the Israeli economy.
The shekel and stock market have weakened, unemployment rates have risen, and investor confidence in Israeli government bonds has decreased. Although the government has approved an aid package for workers and business owners, it's still uncertain if it will be enough to help everyone affected.
The Numbers Speak
The Israeli Ministry of Labor reported that since the war began, around 46,000 workers have been laid off, and about 760,000 workers, which is 18% of the workforce, are currently unable to work.
JPMorgan Chase, an American bank, predicts that the Israeli economy will shrink by 11% in the last three months of this year due to the escalation of the war.
War is not only devastating in terms of lives lost and destruction, but it also has a heavy economic burden. The war against Hamas is costing Israel billions of dollars, and it's affecting the country's economy in many ways.
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Sources: Al Jazeera, Israeli press
