Israel’s war on Hamas will cost the country $53 billion and hamper economic growth into 2024, according to figures published by the Bank of Israel on Monday. Fighting has been paused since a truce came into effect on Friday, but the Israeli military is expected to resume operations in Gaza this week.
Direct military spending will account for $29 billion of the $53 billion total, the bank stated, adding that this figure includes military aid provided by the US. Compensation for damage will come to $6 billion, while other civilian expenditure will come to $6.75 billion. Lost tax revenue and interest on government debt will make up the remainder.
The war will also stifle Israel’s economic growth, the bank warned. Growth will remain at 2% for the rest of the year and through 2024, down from earlier projections of 2.3% and 2.8% respectively.
The conflict will result in the loss of about 3% of GDP by the end of 2024, the bank noted, pointing to the probable closure of businesses and educational institutions during hostilities.
Hamas militants launched a surprise rocket and missile attack on Israeli cities on October 7, before pouring across the Gaza-Israel border and occupying nearby Israeli towns and settlements. Israel responded with an intense campaign of aerial bombardment, followed by a ground invasion of the Palestinian enclave at the end of the month.
More than 1,200 people were killed in Israel and at least 15,000 have lost their lives in Gaza, according to the most recent figures from the Israel Defense Forces (IDF) and Gaza Health Ministry. A truce came into effect on Friday, and was extended for a further 48 hours on Monday, to allow for the exchange of Israeli hostages in Gaza and Palestinian prisoners – some of whom were being held without charge – in Israeli jails.
So far, 40 out of around 240 hostages have been freed by Hamas, in exchange for 117 Palestinian prisoners. Israeli officials have said that they may extend the truce for each additional 10 hostages released, although Defense Minister Yoav Gallant said on Monday that the IDF’s operation will resume once the truce expires, and will continue until Hamas is destroyed.
Although the war is costing Israel around $270 million per day and chipping away at the country’s GDP, its toll on Gaza’s fragile economy has been far more pronounced. Nearly half of the strip’s structures have been destroyed and almost 400,000 jobs have been lost, according to UN reports. With poverty set to rise by almost 45 percent if fighting continues into December, the UN Development Programme warned earlier this month that the war would set back development in Gaza between 16 and 19 years.