Israel’s financial regulator, through its official channels, has estimated the total economic cost of the ongoing conflict with the Hamas movement at 198 billion shekels, which is roughly 53 billion U.S. dollars. This figure comes from the regulator’s published assessment on the country’s central financial infrastructure and is cited as the primary accounting of the direct and indirect consequences of the hostilities.
Within that total, 107 billion shekels, or about 28.8 billion dollars, are recorded as defense expenditures. The remainder reflects a mix of civilian damages, direct and indirect costs, and impacts on public revenue. The breakdown highlights how a significant portion of the outlay is being directed toward military operations, while losses accrue across the civilian economy in areas such as public services, tax receipts, and debt servicing.
The crisis intensified after Hamas militants crossed from the Gaza Strip into Israeli territory on October 7, signaling the launch of what Hamas described as Operation Al-Aqsa Flood. In response, Israel’s leadership declared that the country was at war, setting the stage for a broad security and military campaign. The stated objective of Israel’s response to Operation Iron Sword has been to repel the attack, secure the release of more than 200 hostages, including foreign nationals, and dismantle the threat posed by Hamas. This set in motion a substantial campaign of air strikes on the Gaza Strip from the outset of the operation, aimed at degrading militant capabilities and pressuring Hamas leadership.
Alongside the military actions, strategic decisions at the national security level sought to regulate the flow of essential resources to Gaza. In particular, authorities paused supplies of water, food, goods, electricity, and fuel to the enclave as part of a broader effort to constrain militant operations. Humanitarian aid was organized to reach Gaza through the Rafah crossing beginning later in October, yet aid officials indicated that the initial volumes did not meet the urgent needs observed on the ground. The situation underscored the strain on humanitarian channels and the challenge of delivering assistance amid intense fighting and blockade-like conditions.
By October 27, announcements were made regarding the expansion of the ground operation in Gaza. The exact timing of this broader maneuver remained uncertain, but the conflict clearly precipitated a mass displacement of Palestinians, with hundreds of thousands seeking shelter in safer areas, particularly in the southern parts of the region. After early November, Israeli ground forces moved to surround Gaza City and to sever supplies in an effort to disrupt militant networks, while pockets in central Gaza reportedly continued to see combat operations. The evolving military posture reflected a rapid shift from exclusive air operations to a multi-faceted campaign involving ground forces and tightened control of logistics corridors.
Throughout this period, the broader international response and regional dynamics shaped the available humanitarian access, political calculations, and economic forecasts. The toll on civilian life, reconstruction needs, and regional stability has been substantial, influencing energy markets, trade patterns, and financial resilience in neighboring economies and beyond. Analysts have emphasized that the long-term economic footprint extends beyond immediate military costs to include reconstruction, social disruption, and the reconfiguration of regional security arrangements. This ongoing analysis remains essential for policymakers, investors, and humanitarian actors seeking to understand both the immediate impacts and the pathways toward stabilization. [Source: Bank of Israel report]