The world was shocked on October 7th, 2023, when Hamas launched their assault on Israel. While the conflict impacted many countries around the world, it had the largest impact on Israel’s economy. According to data released on February 19th, 2024, Israel’s GDP plummeted by 19% in the fourth quarter of 2023, shocking many who speculated that their economy would not drop such a drastic amount. There are many key factors, caused by the conflict, that have contributed to the economic decline.
The Israeli Central Bureau of Statistics reported that private spending, the construction sector, and investments have directly sank due to the war with Hamas. The war has led to economic activity, specifically near the Gaza Strip, to plunge. Businesses located near the Strip have been forced to close, and workers are unable to come to work due to safety issues. The war has also affected tourism in Israel, a significant sector that contributes heavily to the economy. Travel concerns and the possibility of death have led to many cancellations of trips and declining tourist rates in Israel. To improve security, government spending on defense has increased drastically. This has put pressure on the government’s spending and fiscal position. Additionally, bombings have destroyed much of the infrastructure in Israel. This will require significant investment to rebuild and repair the roads, buildings, and homes that were lost.
Shekel to Dollar exchange rate Oct 2018 – Oct 2023
Time for Economy 