Would you like to receive notifications on latest updates of the following headlines?

Israeli economy struggles under Gaza war

POSTED ON September 24, 2024 •   Business      BY Abiodun Saheed Omodara
People walk near high-rise buildings in the high-tech business area of Tel Aviv, Israel May 15, 2017. l Credit: Reuters

The prolonged conflict in Gaza has taken a toll on Israel's economy, with poverty now affecting communities even distant from the fighting against Hamas.

Mass demonstrations against Prime Minister Benjamin Netanyahu's contentious judicial reforms had already undermined Israel's economy before the Hamas attack on October 7.

However, the nation's economy suffered a significant setback due to the impact of the most devastating attack in its history and the ensuing war."

The Israeli economy may be solid, but it is struggling to withstand this war that has lasted too long," said economist Jacques Bendelac, who warned of possible recession should fighting persist.

After shrinking by 21 percent in the fourth quarter of 2023, Israeli GDP rebounded by 14 percent in the first three months of 2024, according to official data.

But growth then turned sluggish in the second quarter at 0.7 percent.

The three main ratings agencies have downgraded Israel's debt.

Fitch predicted in August that the Gaza war -- already the longest since the war that led to Israel's creation -- could stretch into 2025.

"There are risks of it broadening to other fronts," Fitch said.

The focus of the war has in recent days shifted to northern Israel, with Hamas ally Hezbollah battling Israeli forces across the border.

Israel's credit ratings remain high, but top officials have nevertheless blasted the agencies' moves.

Netanyahu has insisted that the economy is "stable and solid" and will improve when the war ends.

Israel's two main growth drivers are tech, which is relatively insulated from the war, and weapons, for which the war is a boon.

But the remaining economic engines of tourism, construction and agriculture "are dying out one after the other", said Bendelac, professor emeritus at the Hebrew University of Jerusalem.

Israel stopped issuing work permits for Palestinians after the October 7 attack, creating damaging labor shortages, according to Kav LaOved, an Israeli labor rights organization.

Before the war, some 100,000 such permits boosted manpower in the construction, agriculture and industrial sectors, with tens of thousands of Palestinians also working illegally inside Israel.

Kav LaOved says only 8,000 Palestinian workers have been exempted from the entry ban to work in factories deemed essential.

In economic hub Tel Aviv, construction work is on pause, with skyscrapers and transport projects left half-finished.

Tourism has also plummeted since October 7, with the war driving away holidaymakers and religious pilgrims.

From January to July, Israel welcomed 500,000 tourists -- a quarter of the number for the same period the previous year, the tourism ministry said.

With no clients, 47-year-old Hilik Wald gave up his job as a freelance guide in Jerusalem, which had earned him an average of 18,000 Israeli shekels ($4,755) monthly.

He now works part-time on the information desk of a train station.

For nearly six months, the father of two received government assistance to supplement his wage, but he is no longer eligible.

"I hope the war will be over soon," said Wald.

Over the past two decades, Israel grew "on credit consumption, and in crisis situations many families can no longer repay their loans", according to Bendelac.

High living costs combined with an economic slowdown will "inevitably result in an increase in poverty", he said.

Humanitarian organizations in Israel are already reporting a greater need for their services, with new faces appearing in food distribution queues.

At a shopping center parking lot in Rishon Lezion, a coastal city in central Israel, the NGO Pitchon-Lev, or "Open Heart", offers free baskets of fruit, vegetables and meat twice a week.

Since the war began "we have more than doubled our activities", said founder Eli Cohen, noting that the organization supports nearly 200,000 families nationwide.

New beneficiaries include "young people, families whose husbands are reservists, many people who were former donors and all those who were evacuated from their homes", Cohen said of those displaced by border clashes between Israel and Lebanon-based Hezbollah.

As for recovery prospects, Bendelac said "there is always a very strong restart of the economy" whenever war ends.

But, he added, "the longer this war lasts, the slower and more difficult the restart will be".

READ ALSO
South Africa Surpasses Nigeria in Fuel Imports Amid Dangote Refinery Operations
BY Abiodun Saheed Omodara May 29, 2025 0

Nigeria has lost its long-standing title as Africa’s largest importer of refined petroleum pro...

READ ALSO
Economists Warn of Debt Sustainability Risks as Nigeria Eyes $24.14 Billion in Foreign Loans
BY Abiodun Saheed Omodara May 28, 2025 0

Nigeria's public debt is poised for another substantial increase as President Bola Tinubu has sought...

READ ALSO
Nigeria's Solid Minerals Sector Attracts Over $800 Million in Investments Amid Policy Shift
BY Abiodun Saheed Omodara May 25, 2025 0

The Minister of Solid Minerals Development,Dr Dele Alake announced that Nigeria attracted over $800...

READ ALSO
SNEPCo Urges Indigenous Firms to Enhance Skills for Future Opportunities
BY Abiodun Saheed Omodara May 23, 2025 0

The Shell Nigeria Exploration and Production Company Limited (SNEPCo) has urged Nigerian firms to st...

READ ALSO
JUST IN: Dangote refinery slashes petrol prices by N15 nationwide
BY Abiodun Saheed Omodara May 22, 2025 0

LAGOS, Nigeria — The Dangote Petroleum Refinery recently announced a reduction in the pump pri...

READ ALSO
Sanwo-Olu Advocates for Innovation, Accountability in Economic Policies
BY Abiodun Saheed Omodara May 22, 2025 0

LAGOS, Nigeria - Lagos State Governor Babajide Sanwo-Olu has stated that Nigeria must hasten its pro...

READ ALSO
CBN's Rigid Monetary Policies Threaten Nigeria's Industrialization Efforts
BY Abiodun Saheed Omodara May 22, 2025 0

With the Central Bank of Nigeria (CBN) keeping the benchmark interest rate at 27.5 percent, local ma...

READ ALSO
FG to Auction 753 Housing Units Recovered from Ex-CBN Governor Emefiele
BY Abiodun Saheed Omodara May 20, 2025 0

ABUJA, Nigeria - The Federal Government has declared its intention to sell 753 housing units that we...

OUR CHANNELS:

NEMA Mobilizes Teams to 15 States Amid Flood Warnings
BY Abiodun Saheed Omodara June 5, 2025 0

The National Emergency Management Agency (NEMA) has sent officials to 15 high-risk states to educate...


Edo Faces Diphtheria Outbreak, Two Confirmed Deaths
BY Abiodun Saheed Omodara June 5, 2025 0

EDO, Nigeria (NAN) - A diphtheria outbreak has been confirmed in Edo State, resulting in two deaths....


Tinubu Honors Bill Gates with National Award for Global Philanthropy
BY Abiodun Saheed Omodara June 5, 2025 0

LAGOS, Nigeria - President Bola Tinubu commended Bill Gates, the co-founder of Microsoft and chairma...


Bahrain, Colombia, DRC, Latvia, and Liberia Join UN Security Council for 2026-2027 Term
BY Abiodun Saheed Omodara June 5, 2025 0

The UN General Assembly on Tuesday elected five new non-permanent members to the UN Security Council...


Tinubu Orders Urgent Repairs on Flood-Damaged Bridge in Mokwa
BY Abiodun Saheed Omodara June 5, 2025 0

NIGER, Nigeria (NAN)- President Bola Tinubu has instructed the Federal Ministry of Works to repair t...


Nigeria Needs ₦2.2 Trillion to Eliminate Cervical Cancer by 2030, Says Task Force Chair
BY Abiodun Saheed Omodara June 5, 2025 0

ABUJA, Nigeria — Nigeria will need ₦2.2 trillion to roll out comprehensive cervical cancer ini...


EFCC Charges Two Men for Posing as Fake Sureties in Illegal Mining Case
BY Abiodun Saheed Omodara June 4, 2025 0

The Economic and Financial Crimes Commission (EFCC) has charged two individuals, Shehu Abdu and Isah...


Court Sentence Scrap Seller to 12 Years for Sexual Assault of Four-Year-Old Girl
BY Abiodun Saheed Omodara June 4, 2025 0

A scrap seller, Nasiru Usman, was sentenced to 12 years in prison by an Ikeja Sexual Offences and Do...


70-Year-Old Faces Manslaughter Charges After Fatal Accident
BY Abiodun Saheed Omodara June 5, 2025 0

LAGOS, Nigeria - A 70-year-old man, Isiaka Afolayan, has been detained for careless driving and the...


Police Arrest 49 years old Suspect for Abduction of Two-Month-Old Baby
BY Abiodun Saheed Omodara June 5, 2025 0

DELTA, Nigeria - The police in Delta reported the arrest of a suspect named Joy Temitope for the abd...


More Articles

Load more...

Menu