Nearly a year of conflict in Gaza has severely impacted Israel’s economy, with poverty becoming a pressing issue in communities even far from the frontlines against Hamas.
Mass protests against Prime Minister Benjamin Netanyahu’s judicial reforms had already weakened the economy before the Hamas attack on October 7.
However, the situation worsened significantly following the attack and the ensuing war.
Economist Jacques Bendelac stated, “The Israeli economy, though strong, is facing challenges due to the prolonged conflict. If the fighting persists, there is a risk of recession.”
After a significant decrease in GDP in the fourth quarter of 2023, Israel saw some growth in the early months of 2024, but this growth slowed down significantly in the second quarter.
Israel’s debt ratings have been downgraded by major agencies, with predictions that the Gaza conflict could extend into 2025.
Top officials in Israel have expressed disagreement with these assessments, with Netanyahu asserting that the economy will improve once the conflict concludes.
– Projects on hold –
Israel’s tech industry, which is relatively insulated from the conflict, and its defense sector, which benefits from the war, are the main drivers of growth. However, industries like tourism, construction, and agriculture are facing significant challenges.
The suspension of work permits for Palestinian laborers has led to shortages in these sectors, with construction projects halted and tourism severely impacted.
As a result of the war, tourism numbers have dropped significantly, leading to layoffs and economic hardship for many in the industry.
The prolonged conflict has also led to increased poverty levels and a greater demand for humanitarian services in Israel.
Despite the challenges, there is hope for a strong economic rebound once the war ends, though the longer it continues, the more difficult the recovery may be.
we-myl/mj/rcb/jd/srm/ser
