War-weary Israel Bracing for Economic Crisis as Poverty Spreads
The devastating war in Gaza has sent shockwaves through Israel’s economy, leaving a trail of poverty and economic uncertainty in its wake. With the conflict now entering its 12th month, experts warn that the Israeli economy is struggling to withstand the prolonged fighting, with some predicting a recession if the war persists.
Before the October 7 Hamas attack, Israel’s economy was already reeling from mass protests against Prime Minister Benjamin Netanyahu’s judicial reforms. However, the worst attack in Israel’s history dealt a devastating blow to the economy, and the war that followed has only exacerbated the situation.
"Weak economic growth is likely to continue, and it’s difficult to predict when the economy will return to normal," said economist Jacques Bendelac. "The longer this war lasts, the slower and more difficult the restart will be."
The war has disrupted Israel’s key industries, including tourism and construction. The country’s economic hub, Tel Aviv, is experiencing a construction crisis, with skyscrapers and transport projects left half-finished. Tourism has also plummeted, with a quarter of the usual number of visitors arriving in January-July, according to the tourism ministry.
Hilik Wald, a 47-year-old freelance guide in Jerusalem, was forced to give up his job after the war due to a lack of clients. He now works part-time on the information desk of a train station. "I hope the war will be over soon," he said.
Humanitarian organisations in Israel are also reporting a surge in demand for their services, with new faces appearing in food distribution queues. "We have more than doubled our activities since the war began," said Eli Cohen, founder of the NGO Pitchon-Lev, or "Open Heart," which supports nearly 200,000 families nationwide.
Despite Israel’s credit ratings remaining high, top officials have blasted the agencies’ downgrades, with Netanyahu insisting that the economy is "stable and solid" and will improve when the war ends.
However, the war’s impact on the economy is far from over. With the three main ratings agencies having downgraded Israel’s debt, experts warn that the economy is vulnerable to further shocks.
"The Israeli economy may be solid, but it is struggling to withstand this war that has lasted too long," said Bendelac. "High living costs combined with an economic slowdown will inevitably result in an increase in poverty."
As the war rages on, Israel’s people are bracing for the economic fallout, with many left wondering when the country’s economy will recover from the devastating effects of the conflict.
