Israeli Economy Under Tremendous Strain Amidst War and Uncertainty

In addition to the terrible loss of some of Israel's best and brightest young people who have been killed in action while serving in the IDF during this war, the Jewish State is also under tremendous economic pressure, with Finance Minister Bezalel Smotrich recently estimating that the war has cost the Israeli economy over $68 billion already, with no end in sight.

Dr. Alon Eizenberg, the William Haber Chair in Economics at the Hebrew University of Jerusalem, recently told the Media Line that things are bad, but not as bad as they could be because the Israeli economy was in very good shape before the war started. Nevertheless, he said, the war has “a first-order impact on the Israeli economy. It is not unlike a second war of independence. And unlike the Yom Kippur War of 1973, which lasted three weeks, its end is not in sight.”

"Investments are declining, foreign direct investment are sinking, the appetite for investors to provide capital to Israel is declining, and credit rating companies are lowering the country’s grades," added Chen Herzog, the Chief Economist Officer of BDO, a leading public accounting, tax, and advisory consultancy. "Israel is facing the risk of recession in this overall economic environment,”

“Increasing military expenditure is a given at this moment, but the question is how do we cut unnecessary expenses in other areas that aren’t promoting growth. Beyond the geopolitical and military risk, Israel now also faces an economic risk. Having national resilience isn’t simply about military strength, it's also about economic strength. In a weakened economy, our national security is also weakened.”

"The government must consider these economic factors when making strategic decisions about the duration of the war. Beyond the direct costs, each month of conflict increases indirect costs exponentially.”