Attack on Gaza, the Israeli economy may lose 50 billion dollars

Israel The economic effects of the war on Gaza are beginning to emerge and Israel is paying a heavy price.

The Central Bank of Israel said with reference to preliminary estimates that the Israeli economy is losing 260 million dollars a day due to the war and that the economy may lose 50 billion dollars due to this war.

Experts are questioning whether Israel’s economy is strong enough to bear the costs of this war alone. Because public pressure is mounting on Israeli Prime Minister Binyamin Netanyahu and Finance Minister Biza Lal Sumatrish to revise Israel’s budget.

A big blow to Israel’s economy

Because of the war, Israel’s currency, the shekel, has fallen to its lowest level since 2012. According to the Bank of Israel, Israel’s currency, the shekel, is constantly losing value because of the war. According to Bloomberg, the Israeli currency has depreciated by 0.7% against the US dollar since the start of the war. Israel’s bonds and stocks have also recorded declines as investors fear that Gaza But the ongoing war could turn into a regional conflict.

Israel’s Ministry of Manpower says that a 20 percent reduction in the workforce has been recorded due to the war on Gaza, which could affect Israel’s imports and exports.

Increase in Israel’s war budget

Netanyahu’s coalition government is facing serious budget difficulties for the current fiscal year. Israel’s Ministry of Finance has submitted amendments to revise the budget, which have been approved by Prime Minister Nayyahoo.

Under the amendments, Israel’s war budget is being increased and the budgets of ministries will be cut and coalition funding will also be reduced.

Left parties are criticizing Prime Minister Netanyahu for the decision to cut the funds.

Economic analysts say that Israel is spending heavily on its defense and it seems that defense spending will be prioritized in the next budget as well and after many decades Israel will allocate a huge budget for its defense spending. will

Economist Shahid Mahmood says that ‘Israel’s defense budget will increase and Netanyahu will have to revise the annual budget to maintain his coalition government.’

Israel’s influential economists warned in a letter to the government that the government should revise its budget and prioritize defense.

300 economists this week called on Netanyahu to cut all non-essential spending, rethink spending because billions of dollars could be needed for post-war relief and reconstruction.

Israel’s economy

The size of Israel’s economy is more than 530 billion dollars and the per capita income is 58 thousand 273 dollars.

The central bank’s foreign exchange reserves are $200 billion, which is equivalent to one year’s import bill.

The service sector accounts for 80 percent of Israel’s economy and the industrial sector accounts for more than 17 percent.

Because of the war on Gaza, Israel’s foreign exchange reserves have decreased by 7 billion dollars and now they have reached 191.2 billion dollars.

Analysts’ Opinion

Economist Shaftullah says, ‘Look at Israel’s economy compared to that of the United States and Europe. Yes, if Israel was fighting this war alone, its economy would probably have been destroyed by now.

The global rating agency Standard and Poor’s (S&P) has expressed fear of a five percent decline in the Israeli economy due to the recent war.

The rating agency has also predicted a slowdown in the Israeli economy in the coming months.

Business activity is slowing, consumers are cutting back on goods purchases, which is dampening demand and the investment climate is clouded by uncertainty.

Israel’s budget deficit has reached 2.6 percent of the country’s gross domestic product (GDP) in October, which was 1.5 percent in September.

Israeli soldiers take up positions in an armored vehicle in the border area adjacent to Gaza on November 16, 2023 (AFP/Kenzo Trebullard)

It should be noted that Israel posted a budget surplus of 0.6 percent of GDP in 2022 after 35 years. Due to war expenses, Israel’s budget deficit may reach 3.5% in 2024.

Last year, Israel’s economic growth rate in 2022 was 6.5% of GDP. According to S&P, Israel’s GDP will remain at 1.5 percent this year, while next year’s GDP may reach 5 percent in 2024.

According to the Central Bank of Israel, Israel’s economic growth rate may reach 2.3 percent in 2023, while the economic growth rate may reach 2.8 percent in 2024.

Israel’s arms exports could be adversely affected by this war. Israeli arms exports account for five percent of total exports, while the protracted war may also affect Israel’s tourism as major airlines’ flights to Israel have also been affected since the war.

Because of the war, Israel’s debt-to-GDP ratio has reached 60 percent, which was expected to reach 55 percent by next year.

Shafqatullah, an expert who has a close eye on the Middle East and Arab countries, while talking to Independent Urdu, said that American and European Jews have full control over banking, economy and media. Do it.

Economist Shahid Mehmood said the war could affect Israel’s arms sales, defense exports and investments in high-tech sectors.

Who is paying for the war?

The Central Bank has approved a $45 billion war loan to Israel. The US Congress has approved an aid package of more than 14 billion dollars to Israel.

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According to a report by the US Congressional Research Service, Israel has been allocated 3.3 billion dollars for the military this year.

Economic affairs expert Shaftullah says that the amount of financial loss Israel incurs in the war is helped by the United States and Europe. Till date, no war has been fought alone, Israel’s war machinery is not strong enough to fight this war alone.

Israel’s military power

According to a report by the International Institute for Strategic Studies, there are 169,500 personnel in the Israeli army, while 465,000 people are part of the reserve army.

Israel’s army has 2200 tanks and 530 artillery pieces.

Israel has sophisticated mobile air defenses, capable of intercepting and destroying short-range rockets.

The Israeli Air Force has 339 fighter jets, including 196 F-16, 83 F-15 and 30 F-35 fighters. Israel also has five state-of-the-art submarines.

According to a report by the Stockholm International Peace Research Institute, Israel will spend 23.4 billion dollars in 2023 on defense.

India is the largest buyer of Israeli arms. In the last four years, India bought arms worth 1.19 billion dollars from Israel.

After India, Azerbaijan, the Philippines and the United States are the biggest buyers of Israeli arms. Israel makes large purchases of arms from the United States and Germany.