Israel's Economy in Grave Danger as Gaza War Drags on, Economists Warn

In Jerusalem’s Old City, nearly all souvenir shops are closed. In Haifa’s flea market, forlorn merchants polish their wares on empty streets. Airlines are canceling flights, businesses are failing and luxury hotels are half empty. 

Nearly 11 months into the war with the Hamas terror group, Israel’s economy is struggling as the offensive in Gaza grinds on, showing no signs of ending and threatening to escalate into a wider conflict. 

Prime Minister Benjamin Netanyahu has tried to allay concerns by saying the economic damage is only temporary. But the bloodiest, most destructive war ever between Israel and Hamas has hurt thousands of small businesses and compromised international trust in an economy once thought of as an entrepreneurial dynamo. 

Some leading economists say a ceasefire is the best way to stop the damage. “The economy right now is under huge uncertainty, and it’s related to the security situation — how long the war will go on, what the intensity will be, and the question of whether there will be further escalation,” said Karnit Flug, Israel’s former central bank chief who is now the vice president of research at the Israel Democracy Institute, a Jerusalem think tank. 

The war has inflicted a far heavier toll on Gaza’s already broken economy, displacing 90% of the population and leaving the vast majority of the workforce unemployed. All banks in the territory have shut. (TOI /VFI News)