Prolonged genocide takes a toll on Israel's economy

06 Nov 2023 09:00pm
Israeli demonstrators hold signs and flags during an anti-government protest in Jerusalem on Nov 4. - Photo by AFP
Israeli demonstrators hold signs and flags during an anti-government protest in Jerusalem on Nov 4. - Photo by AFP

SHAH ALAM - In stark contrast to Israeli Prime Minister Benjamin Netanyahu's recent forecasts of regional peace and prosperity, Israel's economy faces severe disruption due to the ongoing conflict with Gaza.

According to a report by Associated Press News, the colonisation that had plagued Palestine, now in its fourth week, shattered many of Netanyahu's optimistic projections.

Israel's economic activities had taken a significant hit.

With 360,000 reservists called up and 250,000 Israelis displaced from their homes, as per Israeli military figures, businesses had suffered.

The hospitality sector witnessed a downturn, with restaurants and stores losing customers.

The aviation industry was equally affected, with major airlines canceling flights to Israel and a dip in tourism.

Agricultural and industrial sectors face challenges due to labour shortages and safety concerns.

Israeli's force aims to dismantle Hamas's governance, not merely contain its fighters, which hints at a potentially prolonged bloodshed.

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Israel's previous atrocities saw a resilient economic bounce-back, but the current situation, with its extended duration and broader scope, presents new challenges.

Financial indicators reflect the stress

The shekel has plummeted to a 14-year low, and stock markets took a hit.

The tech sector, a vital pillar of Israel's economy, was already struggling before the war.

Credit rating agencies had warned of possible downgrades if the conflict escalated.

Amid this turmoil, Israel's Finance Ministry announced an economic aid plan with USD$1 billion in grants for affected businesses.

This week, a group of 300 leading economists reportedly called on Netanyahu and Finance Minister Bezalel Smotrich to "come to your senses!"

"The grave blow that Israel was dealt requires a fundamental change in national priorities and a massive rechanneling of funds to deal with war damage, aid to victims, and the rehabilitation of the economy," they said in a letter, predicting wartime expenses would soar into the billions of dollars.

They urged Netanyahu and Smotrich to "immediately suspend funding to any activities that are not crucial to the wartime effort and the rehabilitation of the economy — and first and foremost, funds budgeted for coalition agreements."

Despite the challenges, the central bank Governor Amir Yaron remained optimistic about the economy's resilience and recovery potential.

The occupation had also prompted Israel to halt operations at the Tamar natural gas field, leading to significant revenue losses.

Energy experts warned of further impacts if Hezbollah intensified its involvement.

Pre-war, Israel's economy was already contending with domestic and global pressures.

The proposed judicial overhaul, inflation, and a global tech investment slowdown were stressors.

The Israel Innovation Authority highlighted the war's impact on startups, stressing the urgent need for support to prevent closures.

While the Israeli government takes steps to mitigate the impact, the complexity suggests a tough road ahead for economic stability and recovery.