- Israel’s economy struggles under the impact of a prolonged war with Hamas, with tourism and small businesses hardest hit.
- Economists, including former central bank chief Karnit Flug, advocate for a ceasefire to halt economic damage and restore stability.
- Gaza faces even more devastating consequences, including mass displacement and the collapse of its banking system.
The prolonged conflict between Israel and Hamas has taken a toll on Israel’s economy, affecting small businesses, tourism, and international trade.
Prime Minister Benjamin Netanyahu has sought to minimize concerns, stating that the damage is temporary. However, uncertainty surrounding the duration of the conflict has deepened, making recovery efforts more challenging.
Ending Conflict: The Key to Restoring Israel’s Economic Stability
On the other side, Gaza’s economy is in a much worse condition, with 90% of its population displaced and the banking system entirely shut down. The fighting has led to a massive loss of life and livelihoods, further deteriorating an already broken economy. Economists emphasize that halting the conflict is essential not only for Israel’s recovery but also for mitigating the humanitarian disaster unfolding in Gaza.
The war has also caused displacement along Israel’s northern and southern borders, as daily attacks from Hezbollah militants in Lebanon have intensified. This internal displacement has added pressure on Israel’s social and economic structures, exacerbating the strain on resources and leading to widespread unease within the population.
Economists, including former central bank chief Karnit Flug, argue that a ceasefire is the only way to mitigate further economic damage. Without it, the war could escalate further, worsening the already precarious situation. They stress that economic recovery is intrinsically linked to security, and the longer the conflict continues, the harder it will be to restore Israel’s economic vibrancy.
Meanwhile, Gaza’s already fragile economy is on the brink of collapse. With most of the population displaced and the banking sector shut down, the humanitarian crisis continues to worsen. A ceasefire could open the door to rebuilding efforts in Gaza, addressing both economic recovery and the dire human consequences of the war.
A ceasefire is crucial to halting the downward spiral of both Israel’s and Gaza’s economies. Without peace, economic recovery will remain out of reach, and the humanitarian crisis will only deepen.
“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
