Multymeter.com – Business & Finance : The Israeli-Palestinian war had a negative impact on the Israeli economy, which declined as a result of the war with Hamas. According to Bank Hapoalim, a war with Hamas would cost Israel at least NIS 27 billion. This was mainly due to the impact of the war on private consumption and tourism, as well as the large-scale mobilisation of reserve troops.
The war also led to a rise in interest rates and inflation in Israel. Before the war, the Bank of Israel predicted that the economy would grow at a rate of 3 per cent in 2023 and 2024, after growing by more than 6 per cent last year. However, the war is expected to slow Israel\’s economic growth.
In addition, the war also caused economic and political uncertainty in Israel, which could hamper investment and economic growth.
Here are some specific impacts of the Hamas war on the Israeli economy:
- Decrease in personal consumption: Israelis were more cautious about spending their money during the war, due to economic and security uncertainty.
- Decrease in tourism: Foreign tourists often cancelled their trips to Israel during the war, citing security reasons.
Mobilisation of reserve forces: The mobilisation of reserve forces draws labour away from the civilian economy, which can disrupt production and services. - Damage to infrastructure: War can cause damage to infrastructure, such as roads, bridges and power grids, which are costly to repair.
- Increased security costs: The Israeli government would have to increase security spending during the war, which could reduce the resources available for investment and other public services.
Overall, the Hamas war has had a significant negative impact on the Israeli economy. This impact can be felt in the form of reduced economic growth, increased inflation and unemployment.
The value of the Israeli currency, the shekel, has also fallen due to the Hamas war. According to Reuters, the value of the shekel has weakened by approximately 5 per cent against the US dollar since the war began. This is due to a combination of factors, including economic and political uncertainty, as well as the rising costs of the war.
The fall in the value of the shekel could have a negative impact on the Israeli economy, as it could make imports more expensive and exports cheaper. This could increase inflation and reduce Israel’s economic competitiveness.
Here are some specific impacts of the fall in the value of the shekel on the Israeli economy:
- Increased import costs: Israeli companies have to pay more for imported goods and services, which may increase inflation.
- Decreased export competitiveness: Israeli goods and services are becoming more expensive in international markets, which could reduce exports.
- Rising cost of living: Israelis have to pay more for goods and services, which may reduce their purchasing power.
Overall, the fall in the value of the shekel is one of the negative impacts of the Hamas war on the Israeli economy.***
