The impact of the present war economy on Israel's deficit, which is predicted to rise from 2.25 to 6.6% of GDP this year, was highlighted in a recently updated 2024 budget, and we will address this topic in this paper.
Talking about the New Budget and War Funding
Overspending on the current conflict with Gaza has been discussed by government ministers, and a vote on the amended budget is expected to take place in the coming days.
The Effects of Conflict on Development
As military escalation continues to rise, the budget draft projects that this year's growth will be negatively impacted by the war with Gaza by 1.1%.
The War's Financial Effects
Assuming that the war will end in severe fighting by the first quarter of 2024, the budget draft projects that the war will cost $40.25 billion in 2023–2024, which presents a significant challenge to the Israeli economy.
The Future of the Israeli Economy
In the coming months, the Israeli economy will face significant challenges that will need for swift action and aggressive stimulus to resume attracting investments and boosting development.
Sustainability of Debt
For the government to keep the balance stable and make direct financial assistance possible, it will be necessary to put in a lot of effort to lower the debt-to-GDB ratio.
Not as good as Corona
Some analysts have compared the impact of Israel's current economic downturn on growth and activities to that of the Corona pandemic.
The government's borrowing and spending have increased significantly as well, which may have an effect on the nation's credit rating.
Obstacles in the Technology Sector
Israel's major engine, the cutting-edge IT sector, is facing unique difficulties as foreign investors are taking a backseat during the conflict.
Humanitarian Difficulties
In addition, Israel must provide humanitarian assistance to about 200,000 people who were forced to flee Israeli villages close to the Gaza Strip.
Joblessness and Emotional Difficulties
Due to business closures, many people and soldiers are experiencing psychological stress from the continuous battle, and many are also facing unemployment.
US Assistance
The US provides Israel with $3.8 billion in military aid annually, highlighting the crucial alliance between the two nations.
Future Finances
According to some projections, Israel could eventually lose $50 billion in the battle.
Note that this material does not constitute financial advice or consultation, and the writer disclaims all liability for any damages stemming from the information contained in this content. It only expresses the writer's viewpoint.
