The recent armed conflict between Israel and Hamas has taken a toll on the nation’s economy, prompting a comprehensive evaluation by the Bank of Israel.
The economic fallout is estimated at 198 billion shekels ($53 billion), with defense expenditure constituting more than half of this total. This figure surpasses earlier estimates and underscores the severity of the situation.
The war has paralyzed numerous businesses, disrupted consumer demand, and impacted the labor market.
The central bank’s research team has revised its growth projections, anticipating a GDP expansion of 2% for both this year and the next. Governor Amir Yaron emphasized the enduring fiscal repercussions, urging a cautious approach to new budgetary commitments.
The government’s response to the conflict and budget allocations has become a point of contention, potentially influencing future rate cuts. As Israel grapples with economic challenges, the central bank remains focused on stabilizing markets and reducing uncertainty.