“Israel’s” economic fallout after Gaza aggression
“Israel's” budget deficit in 2025 may approach 5 percent of GDP (Gross Domestic Product), the total monetary value of all goods and services produced within a country in a specific period, exceeding the government's target but remaining below last year's 6.9 percent, according to Reuters.
This level could help improve “Israel’s” credit rating following a series of downgrades, according to a senior finance ministry official.
In 2024, "Israel's" deficit reached its highest point since 2020, when it surpassed 11 percent of GDP, driven by increased spending and reduced tax revenue from the COVID-19 pandemic.
Read more: “Israel” records $75.9B debt to fund Gaza, Iran operations
Budget deficit concerns
“Israeli” newspaper Calcalist has cast doubt on official government figures, which estimate the country’s budget deficit at 6.9 percent of GDP in 2024—equivalent to 136 billion shekels (USD 36.1 billion). The paper suggests the actual shortfall could be even higher, reaching 7.2 percent of GDP or 142 billion shekels (USD 37.7 billion).
Despite Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich's reassurances that the deficit remains below 7 percent, "Israeli" citizens continue to struggle with rising living costs and slowing economic growth.
Mounting war costs
"Israel’s" Finance Ministry revealed that the war in Gaza has cost the country up to 125 billion shekels (USD 34.1 billion) since October 7.
In December alone, "Israel" recorded a budget shortfall of 19.2 billion shekels (USD 5.2 billion) as it continued to fund military operations in both Gaza and Lebanon.
Calcalist suggested, however, that the total cost of the war could be significantly higher estimated at 250 billion shekels (USD 67.6 billion) by the end of 2024, taking into account its broader economic repercussions.
As "Israel" navigates the economic fallout of the war, attention now turns to the long-term financial and political consequences of the aggression, as well as the measures needed to stabilize the economy moving forward.
