Israel's Economy Struggles Amid Gaza Conflict

Israel's economy is facing significant challenges due to escalating war expenses and rising borrowing costs, with the direct cost of the Gaza conflict reaching approximately $26.3 billion as of August, potentially climbing to $66 billion by the end of 2025. The debt-to-GDP ratio has increased to 67%, and the country is experiencing credit downgrades and a ballooning budget deficit, currently at 8.3% of GDP. Investor confidence is eroding, with concerns over geopolitical and ESG issues leading to a retreat from Israeli bonds, despite some remaining domestic market strength. Experts warn of a looming financial crisis if immediate governmental action is not taken, as indicators suggest a bleak economic outlook with declining foreign investments and tourism. Recent assessments indicate that without intervention, the ongoing conflict could drag Israel's economy into recession, threatening national security. The government has pledged $160 million to support the tech sector amidst these economic pressures.