"One of the most significant negative effects of the war on Gaza is the decline in Israel’s economic growth. Since the beginning of the war, and particularly in the first two months, there has been a decline in consumption, production, and investment, and a complete disruption of the economy in the south and, partially, in the north of the country. This has led to a decline in tax collection and in economic growth. In contrast, the rise in government spending because of the war is expected to mitigate this decline.

According to recent data from the Central Bureau of Statistics, there was a 1.4 percent decline in GDP in the second quarter of 2024 compared to that of 2023. As for business GDP, there was a serious decline of 4.8 percent in the second quarter of 2024, which meant that the economy was entering a recession. The volume of exports also declined by 8.1 percent, imports of goods and services dropped by 9.8 percent, and real estate investments slowed by 16.9 percent.6

According to the Ministry of Finance and the Bank of Israel, expected growth in 2023 declined from 3 percent to 1.5 percent. There are predictions of a slowdown in growth for 2024 from 3 percent to around 1.7 percent.7 If the natural increase in population is taken into account, there is zero growth in 2024. The Aaron Institute for Economic Policy at Reichman University predicts that economic growth in 2024 will be negative, reaching -3.1 percent, which means a decline in GDP per capita by 5 percent; that the GDP fiscal deficit will reach about 9 percent; and that the ratio of external debt to GDP will reach 71 percent.8 The Institute also estimates economic growth to be about 1.7 percent in 2025, and a decline in the deficit to 7.8 percent of output, while external debt will rise to 76 percent of GDP."

https://arabcenterdc.org/resource/the-estimated-cost-of-the-gaza-war-on-the-israeli-economy/

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