Key Takeaways
- Israel's Energy Minister declared an unwavering stance against Hamas, rejecting any "false peace" and warning of severe consequences for those who pursue it.
- The ongoing conflict has inflicted a substantial economic toll on both Israel and the Palestinian territories, with Israel's war-related costs estimated to reach up to $66 billion by the end of 2025.
- The Palestinian economy has experienced a severe contraction, with Gaza's GDP falling by 81% in late 2023 and early 2024, and unemployment in the Palestinian Territories soaring to 57% by March 2024.
Israeli Energy Minister Eli Cohen has issued a strong statement asserting that Israel will not surrender to Hamas, emphasizing that any pursuit of a "false peace" would lead to devastating consequences, including "hundreds and thousands of kidnapped and dead." This declaration underscores Israel's firm position amid the ongoing conflict in the region.
The conflict has had a profound and damaging impact on the economies of both Israel and the Palestinian territories. The Bank of Israel estimates that the war's costs could reach $66 billion (NIS 250 billion) by the end of 2025, encompassing military expenditures and direct and indirect financial losses. This significant financial burden has led rating agencies like S&P and Moody's to downgrade Israel's credit rating.
For Israel, a substantial portion of the economic shock, approximately 90%, is attributed to indirect effects such as reduced investment, a disrupted labor market, and slowed productivity growth. In the final quarter of 2023, the Israeli economy experienced a 20% contraction due to labor shortages in construction and the mobilization of 300,000 reservists. Business investment plummeted by 67.8%, while exports and imports decreased by 18.3% and 42% respectively.
The economic devastation in the Palestinian territories has been even more severe. The war in Gaza represents the greatest economic shock to Gaza and the West Bank in the last two decades. In 2024, the real GDP of the Palestinian territories contracted by 26%. Gaza's GDP fell by 81% between late 2023 and early 2024, and the West Bank experienced a 19% contraction, with unemployment reaching 32%. By March 2024, unemployment in the Palestinian Territories had soared to 57%, resulting in 500,000 job losses. The World Bank estimates that the damage to Gaza's infrastructure alone amounted to $18.5 billion by March 2024, with an estimated $50 billion needed for reconstruction.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.