Since the outbreak of war on October 7 between Israel and the Palestinian militant group Hamas, Israeli aggression on the Gaza Strip is wreaking havoc on the already fragile Palestinian economy, not to mention unprecedented human losses. On the other hand, it devastates the Israeli economy as well, which pays a high price for this aggression.
The war began after Hamas infiltrated southern Israel, sending fighters, firing 5,000 rockets, and taking hostages, which prompted Prime Minister Benjamin Netanyahu to declare “a long and difficult war.“
The war in Gaza has cast a shadow over the Israeli economy in all sectors, with credit rating agencies threatening to downgrade Israel’s rating for the first time, and it is facing an economic crisis.
Recently, the Israeli market saw the 10th largest weekly drop in 26 years.
The main stock index in Tel Aviv has fallen by 11 percent in local currency since October 7, while the shekel (Israeli currency) has fallen to its lowest levels since 2012.
Following the outbreak of war, Standard & Poor’s lowered its outlook for Israel’s rating to “negative,” while Moody’s and Fitch put Israel’s ratings under review for a possible downgrade.
Israel’s central bank has cut its 2023 economic growth forecast to 2.3 percent from 3 percent.
Shares of US technology companies also fell significantly, including leading companies with large operations in Israel such as Intel.
The mobilization of 360,000 reservists and the evacuation of 250,000 Israelis from their homes, have disrupted businesses, leading to empty restaurants, store closures, airline cancellations, and job cuts in natural gas fields, farms, and businesses.
Israel’s economy is significantly impacted by its tech sector, which accounts for 48 percent of its exports. Israel also suspended production at the Tamar gas field off its southern coast.
Israeli economic newspaper Calcalist reported on Sunday, November 5, citing preliminary figures from the Ministry of Finance, that the cost of the war that Israel is waging against Hamas in the Gaza Strip will reach up to 200 billion shekels.
Economy in shambles
300 senior Israeli experts sent a letter to Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich in which they said that the Israeli economy is going through a difficult time, requiring immediate action to prevent further damage, Hebrew newspaper Yedioth Ahronoth reported on October 30.
They called on “Prime Minister and the Minister of Finance to return to their senses. The continuation of the current behavior is harmful to Israel’s economy, undermines citizens’ confidence in public order, and sabotages the ability of the State of Israel to recover from the situation in which it finds itself.”
For the 31st day in a row, on Monday, November 6, the Israeli army continued to launch intensive raids on Gaza, which led to the death of more than 9,700 Palestinians, most of them children and women, in addition to wounding more than 26,000 others.
While Hamas killed over 14,00 Israelis, wounded 5,600, captured 242 Israelis, including high-ranking military personnel, and seeks to exchange them for over 6,000 Palestinian prisoners in Israeli prisons.
