According to estimates by the Israeli Central Bank, the country's total economic damage from the conflict with Hamas is estimated at $53 billion.
A new forecast from the bank's research department puts the conflict's “gross impact” on Israel at $198 billion shekels. More than half of this amount comes from defense spending.
Previously, Leader Capital Markets estimated the fiscal cost of the war at $180 billion shekels in 2023-2024. The Ministry of Finance stated that it costs the economy about $270 million daily.
The Bank of Israel also cut its economic growth forecasts and now expects gross domestic product to grow 2% this year and next, down from preliminary estimates of 2.3% in 2023 and 2.8% in 2024.
The Treasury Department is giving the same GDP forecast for this year, but sees slightly weaker growth going forward.
At the same time, the Monetary Committee left the key rate at 4.75%, which corresponds to all forecasts. The shekel strengthened against the dollar after this statement.
The budget deficit by the end of the year is expected to be 3.7% of GDP; by the end of 2024 it will be 5%. Inflation at the end of 2024 will be 2.4%. Gross defense spending in 2023-2025 is expected to be NIS 107 billion.
The war against Hamas terrorists costs Israel $600 million a week, the Bank of Israel previously reported. This is about 6% of GDP.
Many workers are absent from work due to participation in hostilities, the evacuation of residents of the southern and northern regions and the closure of the education system, making it difficult for parents to work.
