(MENAFN) The Bank of Israel has released figures projecting that the recent war between Israel and Hamas will have significant economic repercussions, estimating a total cost of USD53 billion. This includes direct military spending of USD29 billion, encompassing military aid provided by the United States. Additionally, compensation for damages is expected to reach USD6 billion, with another USD6.75 billion allocated for other civilian expenditures. The remaining portion of the estimated cost will account for lost tax revenue and interest on government debt.
Although a truce has been in effect since Friday, the Israeli military is anticipated to resume operations in Gaza this week. The Bank of Israel warns that the economic impact of the conflict will extend into 2024, stifling Israel's growth prospects. The country's economic growth, originally projected at 2.3 percent, is now expected to hover around 2 percent for the remainder of the year and throughout 2024. The conflict is anticipated to result in a 3 percent loss of GDP by the end of 2024, a consequence attributed to potential closures of businesses and educational institutions during hostilities.
The conflict unfolded when Hamas militants initiated a surprise rocket and missile attack on Israeli cities on October 7. Subsequently, they crossed the Gaza-Israel border, occupying nearby Israeli towns and settlements. In response, Israel launched an intense campaign of aerial bombardment, followed by a ground invasion of the Palestinian enclave at the end of the month. The Bank of Israel's economic assessment sheds light on the multifaceted impact of the conflict, not only in terms of immediate military expenditures but also in terms of long-term economic implications for the nation.
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