The Israel-Hamas war has had catastrophic impacts on Israel’s $488-billion economy, with 350,000 military reservists—about 8 percent of the country’s workforce and a large share of the retail customer base—called into service.
Also, roughly 126,000 more citizens have been evacuated from southern Israel to keep them safe from Hamas rockets and attacks.
A third of the country’s businesses are closed or operating at no more than 20 percent of capacity and more than half report revenue losses of at least 50 percent, according to a survey by Israel’s Central Bureau of Statistics.
In total, 18 percent of the workforce is either in military service, evacuated away from their workplaces, or remaining home to care for children now that schools are closed, the labor ministry reported.
The Atlas hotel company has opened its 16 inns to 1,000 evacuees and has issued a plea to suppliers, customers, and even employees to send donations. “If we can’t fund ourselves, the business will collapse,” operations manager Lior Lipman said in his message.
The government of Benjamin Netanyahu has pledged to flood the business sector with COVID-scale cash to support “an economy under arms…we are opening the taps, sending money to everyone who needs it,” he declared in a public statement.
“Whatever economic price this war exacts on us, we will pay it,” he said.
Many are complaining that the amount of cash being given to reservists and businesses is too little.
Remaining workers “are going to get a nasty shock in their next pay packets,” Ron Tomer, president of the Manufacturers Association of Israel, told the Financial Times. “The government is abandoning its people.”
“I would expect the government to help me while I’m trying to help people,” Atlas’s Lipman said to the FT, but “I’m not sure we’re going to have a safety net.”
Right-wing religious political parties in Netanyahu’s governing coalition are continuing to funnel money to programs encouraging religious observance among children and similar projects that critics say have no place in a wartime economy.
“Come to your senses,” 300 economists wrote in an open letter to Netanyahu and his cabinet.
“The grave blow that Israel was dealt requires a fundamental change in national priorities and a massive rechanneling of funds to deal with war damage, aid to victims, and the rehabilitation of the economy,” the letter said.
Government officials “still have not shown they understand the gravity of the situation,” Eugene Kandel, chair of Start-Up Nation Policy Institute, said to the FT.
“You need to have a laser-like focus on the war and rebuilding people’s trust in the state and its leadership and investing in Israel’s resilience,” he added.
TREND FORECAST: What is long forgotten, since it ended on October 7th when the Hamas attack killed some 1,200 Israeli’s, was the 39 weeks of hundreds of thousands of Israelis taking to the streets in protest of Prime Minister Benjamin Netanyahu’s Judicial Reform act. Indeed, it was, according to Israeli newspapers, a civil war. On September 11th, this was the headline on Haaretz: Cold Civil War: Israel’s Pro-democracy Movement Takes Center Stage on ‘60 Minutes’
We note this since Israel’s economy was sinking as a result of the civil war and at the same time, as we extensively reported, Israel’s military and its settlers in occupied territories ramped up conflict with Palestinians… which combined was not only bringing down the spirit of the nation, but also its economy.
Now, with the Israel War ramped up to levels never previously witnessed, we forecast it will drive the Israeli economy into depression as the spirit of fun and tourism is sapped from the nation and more people and businesses leave Israel to escape the war intense environment.