The Governor of the Israeli Central Bank, Amir Yaron, confirmed that the possibility of the outbreak of hostilities on the northern borders will expose Israel to more serious problems compared to the problems resulting from the current escalation in the south.
Yaron said at the International Monetary Fund conference in Washington, in response to a question about possible scenarios for the development of the conflict in Israel: “If (an escalation on) the northern border occurs - and we all hope it will not happen - it may cause much greater difficulties.”
He added that Israel currently faces enough doubts with the current escalation of the Palestinian-Israeli conflict on the southern border.
He added: "It's just a completely different scenario."
The war on Gaza has entered its second month, as Israel continues to bomb the Gaza Strip, and Palestinian factions continue to target the Israeli forces penetrating the Strip.
In the north, the border with Lebanon has witnessed tension and intermittent exchange of fire and missiles between the Israeli army on the one hand, and Hezbollah on the other, since the start of the confrontation between Hamas and Israel on October 7.
Yaron said the war with Hamas is a “major shock” to the economy that is proving costlier than initially estimated.
While Israel’s economy is strong and stable, “there is no doubt the war will have fiscal implications and generate budget pressures,” Yaron said on Thursday in Washington.
Israel’s gross domestic product growth is likely to be lower by 1% in 2023 and 2024, Yaron said, and “the debt-to-GDP ratio is likely to rise somewhat more than 65% by the end of ‘24, as costs are larger than it was initially projected.”
the central bank sold more than US$8 billion of reserves in October – and also because of increased optimism among traders that the war will more or less be contained to Gaza.
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