The financial shock is rippling through the economy, which was forced to shift to a war economy within days, shocking Israel and leading to retaliatory strikes followed by a ground attack on Gaza, giving its economy a Covid-like shock, according to Bloomberg.
An official in the Israeli Ministry of Finance as saying that his country will face a growing budget deficit over the next two years, which may reach 9% of its gross domestic product.
The Israeli budget deficit reached 2.6% of GDP in October, and according to the official, the total deficit is expected to rise to about 9% over the next two years.
The Israeli Bureau of Statistics had previously said that the unemployment rate rose to about 10% in October after the war on Gaza.
Bloomberg quoted a consulting company as saying that the Israeli government's spending on the military operation in the Gaza Strip will reach $48 billion.
According to estimates by Leader Capital Market, a consulting company, “The war will cost Israel’s budget about 180 billion shekels ($48 billion) in 2023-2024, and Tel Aviv will bear two-thirds of the total costs, while the United States will pay the rest.”
Bloomberg also indicated that the continuation of hostilities costs Israel's budget about $270 million per day.
The credit rating agency Standard & Poor's published a special report on the Israeli economy in which it lowered its expectations for Israel's rating from "stable" to "negative."