GAZA — The cost of the war on Gaza, which
Israel will bear, is estimated to be at least 27 billion shekels ($7 billion)
so far, according to preliminary expectations from
economic entities inside Israel.
اضافة اعلان
This takes into consideration the anticipation
of a long campaign and whether a ground offensive to invade parts of Gaza will
last for several weeks, Al Mamlaka TV reported.
A rough and initial estimate can assume that
the current war costs borne by the Israeli occupation will reach at least 1.5
percent of the
Gross Domestic Product (GDP), which means an increase in the
budget deficit by at least 1.5 percent of the GDP as well.
The expenses of the second Lebanon war in
2006, which lasted for 34 days, were estimated at 9.4 billion shekels ($2.4
billion), or 1.3 percent of the GDP, according to the Israeli Institute for
National Security Studies.
The war's impact on the Israeli economy is
expected to be devastating and unprecedented, especially in private consumption
and tourism figures.
Israel faces a sharp decline in the technology
and tourism sectors, which are its main growth drivers, and a weakening shekel
exchange rate.
Since the beginning of operation
Al-Aqsa Flood" and Israel's declaration of war, local stocks and bonds have
dropped, many companies and schools remain closed, while most airlines have
suspended flights to Tel Aviv.
This week, the Israeli central bank stated
that it would sell up to 30 billion dollars in foreign currency to support the
shekel and prevent its collapse.
Despite the announcement from the Israeli
Central Bank, the local currency weakened by more than 2 percent over the past
two days and is now traded at around 3.95 new shekels per US dollar.
On Tuesday, the
International Monetary Fund (IMF) warned that the global economy is facing a new state of uncertainty from the
war between Israel and Hamas and could see repercussions from the conflict in
the Middle East - especially oil prices, which have risen by more than 4
percent.
Last August, Israel's fiscal deficit widened
to 1.3 percent of the GDP, or 23.1 billion shekels (6 billion dollars), over
the previous twelve months, as Israel's tax revenues continued to decline and
government spending increased.
There will now be a need for more government
spending for the military campaign, which may mean borrowing more money in a
high-interest-rate environment and possible tax increases, having devastating effects
on the Israeli economy.
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