Jerusalem Post article: Gaza war is putting pressure on Israel's economy

Its credit rating has been downgraded to “A2” with a negative outlook for the first time in history, and while Israel faces the challenges of the ongoing war on Gaza, economic threats to the Israeli economy are increasing.

Recent discussions at the Economic Outlook 2024 conference in Tel Aviv revealed a consensus of concern among experts and leaders, highlighting the need for an urgent reassessment of priorities.

With increasing economic pressure as a result of increased military expenditure, experts believe that focusing on the need for fiscal responsibility and taking strategic decisions to protect economic stability in the face of unprecedented challenges is a priority at this stage.

In an opinion article by financial affairs writer Shoshana Tita published in the Israeli newspaper The Jerusalem Post, she expressed her concerns about the impact of the ongoing war in Gaza on the economy, and stressed the need for a change in government priorities.

This article draws insights from a conference in Tel Aviv titled “Economic Outlook to 2024,” where leading experts unanimously agreed that Israel cannot continue business as usual after October 7.

Israel's military spending has reached 75 billion shekels since the war on Gaza began (Reuters)

The author highlights the rapid growth of the Israeli economy over the past two decades, which has contributed to reducing the deficit. However, she says the current conflict requires a reassessment of priorities due to the significant increase in military expenditure.

Comparing the critical period of 1974, the author emphasizes the importance of avoiding a repetition of the lost decade after the October 1973 war.

The author proposed a “New Deal” similar to Franklin Delano Roosevelt's initiative following the Great Depression in 1933, aimed at addressing the large military, economic, and social expenses facing Israel.

In the author's opinion, a demilitarized Gaza in 2024 would require a “Marshall Plan” funded by Europe and the United States, which would ultimately benefit Israel.

She points to the financial pressures caused by the war, and that each Iron Dome interceptor missile costs between $50,000 and $70,000. Military spending since the start of the war has reached NIS 75 billion ($20.4 billion), and is expected to reach NIS 125 billion ($34 billion) this year, excluding a possible large-scale war with Hezbollah in the north. Could.

The author cites Dov Kotler (CEO of Bank Hapoalim) as calling on the government to exercise fiscal responsibility in funding rising military expenditures and reconstruction expenses in southern and northern Israel.

The article warns Eyal Ben Simon (CEO of Phoenix Holdings) that Israel enters the year 2024 in weak economic conditions due to misplaced economic priorities, which will require Israel to make difficult choices at the economic crossroads it faces. Emphasizes on.

For his part, opposition leader Yair Lapid expressed his concern about the imbalance between the size of the government and the military. He said that maintaining the NIS 25 billion increase in the military budget would require a collective effort from all sectors of the population.

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