Gaza war estimated to cost Israel $53 bn: Central bank
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Jerusalem: Israel's war with the Hamas militant group is estimated to cost the Jewish nation about 197 billion shekels ($53 billion), according to a forecast issued by the country's central bank.
According to the Bank of Israel, the sum comprises roughly 107 billion shekels of defense expenditures, 22 billion shekels of damage compensation, and 25 billion shekels of other civilian expenditures, reports Xinhua news agency.
Additionally, interest on government debt is expected to reach 8 billion shekels, while loss of tax revenue due to the conflict is estimated at 35 billion shekels.
The forecast was formulated under the premise that the war's direct impact on the Israeli economy would persist into 2024 with decreasing intensity.
According to the forecast, Israel's GDP is expected to grow by 2 per cent in 2023 and 2024, lower than the growth assessments of 2.3 per cent for 2023 and 2.8 per cent for 2024 in last month's forecast.
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Due to the expected high expenses and the sharp decrease in tax collection, the bank projected that the government's debt would rise from 60.5 per cent of GDP in 2022 to 63 per cent in 2023 and further to 66 per cent by the end of 2024.
Governor Amir Yaron warned that “the fiscal ramifications” of the war will endure over the medium term and urged caution from the government as it hammers out a new budget.
“Alongside the need to provide a budgetary response to needs created by the war, in emergency times as well there is considerable importance to maintaining a responsible fiscal framework,” he said. “It is important that the government cut new expenditures of a prolonged nature.”
Israel’s worst armed conflict in half a century has devastated the economy by paralyzing many businesses, jolting consumer demand and draining the labour market of workers following the unprecedented attack by Hamas on October 7.
With inputs from agencies
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