Israel-Gaza War: The Cost of Conflict

Israel's military expenditure as a share of GDP reached 8.8% in 2024 — marking a significant increase from previous years.

Israeli defense spending could average approximately 11% of GDP each year for the rest of this decade.

Increased military spending amid the war led to delays and cuts in Israel’s public infrastructure and social welfare projects, affecting long-term economic development.

The government budget deficit could reach close to 16% of GDP each year, throughout the rest of this decade.

In addition, the war led to the mobilization of around 360,000 Israeli reservists and the suspension of work permits for approximately 140,000 Palestinian workers from the West Bank. This resulted in labor shortages.

Israel’s Supreme Court ruled in June 2024 that ultra-Orthodox men must also be conscripted into the military.

Consumer confidence in Israel declined sharply following the outbreak of the war, leading to reduced household spending and a slowdown in economic growth.

Israel’s public debt could surpass 70% of GDP in 2025, before falling back to an average of approximately 66.5% of GDP through the end of the decade.

Between October 2023 and July 2024, approximately 8,300 high-tech employees left Israel, representing about 2.1% of the country's high-tech workforce.