Afrasianet - The Israeli war on the Gaza Strip has caused widespread economic effects, as a recent study revealed many financial and economic repercussions on the Israeli economy..

Al-Zaytouna Center for Studies and Consultations published a detailed report highlighting the cost of the war and its repercussions on various economic sectors in the occupation state..

The cost of war

The cost of the war has reached significant figures, and it is estimated that the total cost of the war on Gaza has reached more than $60 billion so far. This cost includes military and civilian expenditures which include military equipping, logistical and reconstruction expenses in the affected areas within the Israel.

The study's author, Dr. Abdul Allah Al-Ghazzawi, stated that Israel's GDP fell by 1.4% in the first quarter of 2024 compared to the corresponding quarter of the previous year, falling from $ 420 billion to $ 414 billion..

GDP per capita fell by 3.1%, from $36,000 to $34,900, reflecting the magnitude of the war's negative impact on the economy..

Credit rating decline and shekel deterioration

The aggression also affected Israel's credit rating, as Moody's downgraded Israel's credit rating to A2 with a negative outlook..

Standard & Poor's predicted that the government's overall deficit will widen to 8% of GDP in 2024, compared to 5.5% in 2023..

All this, according to the study, led to an increase in borrowing costs, as interest rates on government bonds rose from 3.5% to 4.2%.%.

The shekel also depreciated to its lowest level against the dollar in the last eight years, with the dollar reaching 3.85 shekels at the beginning of 2024, but rising to 4.20 shekels at the end of July July 2024, which increased the cost of imports and negatively affected local prices. These changes have led to an increase in the cost of sovereign debt by $1.2 billion annually..

Collapse of companies and projects

Israeli companies have been hit hard by the war, according to the study, with many businesses closing their doors and trade and investment slowing sharply. Semi-official data showed 726,000 Israeli companies had closed since the war began, with the number expected to rise to 800,000 by the end of the year..

This figure is equivalent to about 10% of the total companies registered in the Israel, and many international companies such as Nestlé and Zara have partially or completely withdrawn from the Israeli market, affecting internal and external trade..

Foreign direct investment declined by 40%, from $25 billion in 2023 to $15 billion in the first half of 2024, reflecting the decline in foreign investor confidence in the Israeli market..

Export volumes also decreased by 15% in the first quarter of 2024 compared to the same period of the previous year, negatively impacting revenues..

Deteriorating living conditions

The study stated that the living conditions of Israelis were greatly affected, as unemployment and poverty rates increased, consumer spending decreased by 0.7%, and the consumer price index increased by about 12%, which led to the deterioration of the economic situation of Israeli families..

According to the Latet report, 85.1 percent of Israeli households are in short supply, while 81.8 percent have accumulated debt. The poverty rate in Israel was 22.7 percent in 2023 and rose to 25.3 percent in mid-2024. These figures indicate that more than a quarter of the population lives below the poverty line, which increases the burden on social services and government support, and crime rates have increased by 7% as a result of increasing economic pressures..

Labor market contraction

The war caused the labor market to shrink, according to the study that showed unemployment rates rose to their highest levels since April April 2021. The industry, technology, energy, banking and tourism sectors have been hit hard, with the unemployment rate rising from 4.5% in January January 2024 to 6.2% in July July 2024, meaning the loss of hundreds of thousands of jobs.

Specifically, the high-tech industry lost about 30,000 jobs, while the number of workers in the tourism sector fell by 25%. The prolonged withdrawal of workforce in this sector will also affect the attractiveness of foreign investors, as new investments decreased by 20% compared to the previous year..

A recent report showed that the unemployment rate among young people (18-25 years) rose to 15.8%, reflecting the significant challenges this age group faces in finding jobs..

The construction sector is reeling

The construction sector is almost completely paralyzed, with construction workshops halted and property sales deteriorating. The recall of more than 300,000 reservists has added to the challenges facing the sector, with 14,000 construction workshops completely shut down..

Property sales fell by 35% compared to the previous year, and real estate value fell by 10%. Investments in the construction sector reached $15 billion in 2023, but fell to $9 billion in the first half of 2024, reflecting the scale of the crisis the sector is facing..

The cost of building materials increased by 20% due to disruption of supply chains and higher shipping costs..

Agriculture sector is bleeding heavily

The study indicates that the agricultural sector has been hit hard, with losses amounting to about two billion shekels per month ($520 million). The evacuation of farms reduced milk and egg production by 80 percent.%.

The denial of entry to Palestinian workers led to a significant shortage of agricultural labour, with cereal production falling by 25 percent, local prices being affected and agricultural production costs soaring. Israeli agriculture has lost NIS 10 billion ($2.6 billion) since the war began, with losses expected to increase if the situation continues. The fruits and vegetables sector lost about NIS 1.5 billion ($400 million), raising prices by 15 percent in local markets..

Gas production declines

According to the study, the aggression caused a decline in gas production, as Chevron suspended its gas exports through the Eastern Mediterranean gas pipeline to Egypt. Israel suffered losses of hundreds of millions of dollars a week, as gas production fell by 30 percent.%.

This decline has affected domestic energy supplies and increased the cost of industrial production. The gas sector's losses have reached $2.5 billion since the war began, reflecting the significant challenges faced by this vital sector. Reduced gas production has also increased the cost of electricity by 10%, negatively impacting energy-dependent industries..

Technology sector crisis

High-tech has always been the locomotive of the Israeli economy, but the war has had a significant impact on this sector, as many companies have stopped working, laid off thousands of employees, and the volume of investments has decreased by 50%, in a move that reflects the magnitude of the crisis facing this sector..

Technology exports decreased by 20% in the first half of 2024 compared to the previous year, impacting national revenues and increasing economic challenges..

Innovation and technological development have also been greatly affected, with patent applications falling by 30% as a result of the unstable environment..

Interrupted sea freight

The Israeli economy has faced a new crisis due to Houthi threats in Yemen to target Israeli ships. Houthi attacks on Israeli or Israeli-linked vessels have caused higher transportation insurance costs, thereby increasing the prices of products on the Israeli market..

Insurance costs rose by 25 percent, freight rates increased by 15 percent, while shipping losses reached $500 million in the first half of 2024, with costs expected to increase if threats persist..

This situation negatively affected exports and imports, with cargo movements reduced by 20% in major ports..

Tourism paralysis

The tourism sector was also hit hard, according to the study, with the number of tourists down by 50% in the first half of 2024 compared to the previous year..

Many flights were halted, hotel reservations were canceled, tourism revenues were affected, and tourism revenues fell from $8 billion in the first half of 2023 to $4 billion in the same period in 2024..

The losses of the tourism sector amounted to $ 1.5 billion per month, reflecting the magnitude of the negative impact of the war on this vital sector. Many hotels and restaurants closed as demand declined, leading to more job losses and increased unemployment..

The report reveals the magnitude of the negative economic repercussions of the war on Gaza, which has affected various aspects of the Israeli economy. These challenges are expected to continue for a long time, calling for immediate action to enhance economic stability..