The war on Gaza has greatly affected the Israeli economy. The Israeli Ministry of Finance is worried that if the war goes on for a long time, it could cause a recession in Israel.
The Ministry's Concerns
The Israeli Ministry of Finance believes that if the war continues, it could lead to a recession in Israel this year and the next. They are especially worried if the war expands to include other areas besides Gaza. This could have a big impact on the economy.
What Could Happen?
The Israeli Ministry of Finance has come up with different scenarios to understand how the economy might be affected. They have some predictions based on how the crisis unfolds.
Scenario 1: Limited Confrontation
In this scenario, the war stays focused on Gaza and there is a limited conflict with Hezbollah in Lebanon. The Ministry estimates that this would lead to a loss of working days and affect the GDP (Gross Domestic Product). They predict a decline in economic growth to about 0.6% or 11.8 billion shekels (around 3 billion dollars) if the crisis lasts for a month.
Scenario 2: Conflict Expansion
In this scenario, the conflict expands to include both Gaza and Lebanon, but only for a month. The loss of GDP during 2023-2024 would be around 44 billion shekels (11 billion dollars). Economic growth would decline to 2.2% in 2023 and 2.5% in 2024. However, the Ministry hopes for a recovery by the third quarter of 2024.
Scenario 3: Extended Conflict
If the conflict continues for a longer time and spreads to more than one front, the loss of GDP could reach a whopping 67 billion shekels (17 billion dollars). Growth rates would decline to 1.3% in 2023 and 0.6% in the following year. Recovery might not begin until the fourth quarter of the next year.
The Current Situation
As of now, the war has been going on for 22 days. Israel has been targeting civilians in Gaza, resulting in a high number of Palestinian casualties. The Palestinian resistance, led by the Hamas movement, has responded by bombing Israel. The situation is tense and uncertain.
The war on Gaza is not only causing human suffering for Palestinians but also impacting the Israeli economy. The longer the war goes on and the more it spreads, the worse the economic consequences could be.
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Sources: Al Jazeera, Israeli press
