As Israel grapples with the costs of prolonged warfare, the country's GDP could face a hit of up to 10%, according to projections reported by Israeli financial publication Calcalist.
Israel could see an economic impact of up to 200 billion shekels, approximately 50 billion US dollars, from its conflict with Hamas, per the outlet.
These preliminary estimates from the Israeli Finance Ministry, as referenced by Calcalist and further reported by Reuters, assumes the conflict will last between eight to 12 months, stay confined to the Gaza Strip, and not escalate with involvement from Hezbollah in Lebanon, Iran or Yemen.
Additionally, the forecast is based on the condition that roughly 350,000 Israel Defense Force reservists, mobilized at the conflict's outset, would resume their civilian occupations soon.
The ministry's estimate, equating to nearly 10% of Israel's gross domestic product (GDP), is deemed “optimistic.”
Daily expenses of the conflict are approximated at $255 million, with defense spending accounting for half of the total projected cost. The economy could also suffer from a loss of revenue, estimated at up to $15 billion. Business disruptions due to the conflict could amount to about $5 billion in losses, and a similar sum might be allocated for medical care of the war-affected populace.
To put the figure in perspective, Israel's comprehensive response to the COVID-19 pandemic cost the nation around $40 billion over two years.
The ongoing conflict's financial demand is expected to surpass the pandemic response, as Finance Minister Bezalel Smotrich indicated that the relief package for Israelis affected by Hamas' October 7 attack, which resulted in 1,400 fatalities, would be more significant than the aid distributed during the COVID-19 crisis.