War with Hamas Expected to Cost Israel Over $50 Billion – Newspaper Report by Reuters

JERUSALEM – Israel’s ongoing conflict with Hamas in the Gaza Strip may incur costs of up to 200 billion shekels (approximately $51 billion), according to initial figures from the Finance Ministry, as reported by the Calcalist financial newspaper.

The estimate represents about 10% of the country’s gross domestic product and is based on the assumption that the conflict will last between eight to twelve months, remains confined to Gaza, and does not escalate to involve Hezbollah from Lebanon, Iran, or Yemen. It is also based on the expectation that around 350,000 reservists will be able to return to work soon.

Calcalist noted that the Finance Ministry considers the 200 billion shekel figure to be an “optimistic” scenario, although the ministry has stated it does not support the newspaper’s data.

Hamas launched a significant and deadly attack on Israeli civilians on October 7, prompting Israel to conduct extensive airstrikes in Gaza with the aim of dismantling the group.

According to Calcalist, approximately half of the estimated cost will arise from defense expenditures, which are expected to average about 1 billion shekels daily. An additional 40-60 billion shekels may stem from lost revenue, 17-20 billion for business compensation, and another 10-20 billion shekels allocated for rehabilitation efforts.

Finance Minister Bezalel Smotrich has previously indicated that the government is preparing an economic aid package for those affected by the conflict, which is expected to be “larger and broader” than the assistance provided during the COVID-19 pandemic.

Prime Minister Benjamin Netanyahu asserted that the state is dedicated to supporting all who are impacted by the ongoing violence. He emphasized an open directive to ensure financial resources are available to those in need, similar to efforts made during the pandemic. He acknowledged the economic challenges posed by the war but expressed confidence in the strength of the economy, stating that the state would absorb the costs without hesitation.

Following the escalation of the conflict, credit rating agency S&P lowered its outlook for Israel to “negative,” while Moody’s and Fitch have placed Israel’s ratings under review for a possible downgrade.