The Calcalist financial newspaper reported Israel’s ongoing conflict with Hamas in the Gaza Strip could cost up to 200 billion shekels (approximately $51 billion).
The figure, cited from preliminary Finance Ministry estimates, represents about 10% of Israel’s gross domestic product. The estimate assumes the conflict lasts between eight to 12 months and remains confined to Gaza, without the full involvement of Hezbollah, Iran, or Yemen. It also factors in the return of around 350,000 Israeli military reservists to work.
The newspaper outlined the anticipated financial burden, suggesting that half of the total cost would arise from defence expenses, amounting to around 1 billion shekels daily. Additional costs include a projected loss of revenue (40-60 billion shekels), compensation for businesses (17-20 billion shekels), and funds for rehabilitation (10-20 billion shekels). However, the Finance Ministry has not confirmed these figures.
Government Response to Economic Challenges
Finance Minister Bezalel Smotrich indicated that the government is preparing an economic aid package for those affected by the conflict, expected to be more substantial than the support provided during the COVID-19 pandemic. Prime Minister Benjamin Netanyahu has pledged state assistance, emphasizing the need to provide financial support to all impacted, similar to the approach taken during the pandemic. He reassured that despite the economic costs of the war, the government would not hesitate to provide necessary funding.
In light of the war, S&P has revised Israel’s credit rating outlook to “negative.” Additionally, Moody’s and Fitch are reviewing Israel’s ratings for possible downgrades, reflecting concerns about the economic impact of the prolonged conflict.
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