Israel faces a potential hit to its economy from ongoing military operations in the Gaza Strip. Early estimates cited by Calcalist suggest damage could reach around 200 billion shekels, roughly 51 billion US dollars, if actions conclude before the end of 2024. This figure underscores a significant portion of the country’s annual economic output and serves as a sobering indicator of the broader macroeconomic risks tied to the conflict.
Preliminary figures from the Israeli Ministry of Finance indicate that this damage could amount to about 10% of Israel’s GDP in a scenario where the current level of interstate hostilities continues for another eight to twelve months and remains confined to the Gaza region. The assessment rests on optimism about the duration and geographic scope of the fighting, acknowledging that extended fighting could push the economic costs even higher.
Another crucial assumption in the projection is the mobilization and subsequent release of reserve forces. The analysis presumes that the approximately 350,000 reservists called up would be able to return to civilian work in the near term. If that return is delayed, the economic impact would likely worsen, amplifying the disruption to productivity and the labor market. By contrast, Israel’s experience during the COVID-19 pandemic cost the economy about 160 billion shekels, equivalent to around 40.8 billion dollars, illustrating the substantial economic burden that large-scale events can impose on the state’s finances.
In terms of public spending, the forecast highlights a shift in the composition of expenditures toward security and defense. The study notes that defense outlays linked to the conflict are expected to amount to roughly 100 billion shekels, or about 25 billion dollars. A sizable portion of these costs is projected to be tied to reservists called up for duty, reflecting the immediate fiscal pressures of sustained military operations and readiness commitments.
Comments from energy economists have suggested that geopolitical escalation in the Middle East could influence global energy markets. Maxim Kanishchev, an energy expert cited in the discourse, indicated that oil prices might surge to extreme levels during periods of intensified regional conflict. Such price movements would add layers of complexity to the economic landscape, affecting everything from consumer energy bills to industrial costs and inflation dynamics.
On the international front, political leaders have framed the war’s trajectory as a pivotal and potentially decisive phase. Reports associated with the Ukrainian and broader regional contexts have highlighted that the outcomes of related conflicts could shape strategic calculations for years to come. Observers note that the timing and scope of hostilities, alongside diplomatic efforts and international responses, will influence both market sentiment and macroeconomic risk assessments across the region.
Taken together, the figures suggest that the economic reverberations of the Gaza operation could extend well beyond immediate fiscal outlays. They imply a balancing act for policymakers as they manage defense needs, fiscal sustainability, and the resilience of the private sector, all while navigating the potential for broader spillovers into energy markets, inflation, and investor confidence. The evolving situation remains a critical touchstone for economic planning and policy formulation in Israel and for regional observers evaluating risk and stability in the Middle East.