Israeli Debt Doubled Since Beginning of War on Gaza

Analysts predicted last year that Israel would need roughly $53 billion to fuel its war on Gaza

Israel’s finance ministry said on 15 April that the war on Gaza has led to Tel Aviv’s debt increasing twofold last year.

The ministry’s report stated that Israel amassed 160 billion shekels ($43 billion) in debt in 2023, 81 billion shekels ($22 billion) of which were since the start of the war in October. In comparison, Israel raised a total of 63 billion shekels ($17 billion) in debt in all of 2022.

The total debt in 2023 amounted to 62.1 percent of gross domestic product (GDP), up from 60.5 percent in 2022 due to war spending and its shrinking GDP. Israeli public debt is expected to increase to 67 percent in 2024.

The finance ministry said that Israel's public debt increased 8.7 percent last year to 1.1 trillion shekels ($300 billion), partly due to higher inflation and interest rates.

As debts pile up, Israel's GDP continues to spiral.

Bank of Israel Governor Amir Yaron said that the increasingly negative global sentiment towards Israel's war on Gaza may cast a further toll on its economy.

“As the sentiment erodes, then this intangible capital may be damaged, and if it is damaged, it could potentially hurt how investors see us and our capabilities,” Aaron said. “And the more there is such an erosion, the better we will have to be, and work harder to compensate for it.”

In February, reports came out which said that the Israeli economy shrunk by nearly 20 percent in the span of three months at war.

The GPD sunk 19.4 percent in the fourth quarter of 2023, according to Israel's Central Bureau of Statistics.

This marked the deepest plunge since the second quarter of 2020 when coronavirus-related lockdowns and their effects on consumer spending brought the market down nearly 30 percent.

Multiple financial firms, from Fitch to Moody's, have downgraded Israel's credit rating as a result of Tel Aviv's war spending.

🔗SOURCE ➡️ The Cradle

Related: 2/25 — War-battered Economy Plunged Almost 20%, Marking Sharpest Contraction Since Pandemic — Israel

Israel’s economy shrank by nearly one-fifth in the last three months of 2023, as war with the Hamas terror group in Gaza took a heavy toll on consumer spending, trade and investment, data released Monday showed.

Fortune reported in "Israel’s Economy Sinks 20% As The War Decimates Consumer Spending And Real Estate Investments" [bypass paywall]:

"The worse-than-forecasted results were driven primarily by two sectors that were heavily impacted by the war: consumer spending, and real-estate investment. Private consumption in the quarter declined 26.9%. "

1/26 — Israel Turns to India to Fill Workforce Void

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