Israel has released a preliminary estimate of the economic damages incurred during the recent 12-day war with Iran. According to the Ministry of Finance and the Israeli Tax Authority, the losses amount to 10 billion shekels, which is approximately 3 billion US dollars. These funds are necessary for the restoration of infrastructure, repair of buildings damaged by rocket fire, and compensation for local businesses.
This is reported by Finway
Greatest Destruction in Israel’s History
According to the director of the Tax Authority, Shai Agaronovich, the scale of destruction caused by the conflict has been unprecedented for the country. Significant expenses are anticipated for payments to businesses that were affected by the shelling and had to temporarily cease operations. The state has allocated up to 5 billion shekels for these compensations, which could potentially double the amounts paid after the October Hamas attacks, when settlements were destroyed and areas in northern Israel were damaged.
“This is the greatest destruction in the history of the country.”
Economic Consequences and Forecasts
The stated amount does not account for the costs of replenishing weaponry and air defense systems that were actively used during the hostilities. Israel’s Finance Minister Bezalel Smotrich reported that the total losses could reach 12 billion dollars. At the same time, the head of the Bank of Israel, Amir Yaron, estimates the losses to be half as much.
Even in the case of a moderate development of events, the conflict will pose a serious test for the Israeli economy, which has been under strain for more than a year and a half. The central bank forecasts a GDP growth of 3.5% in 2025; however, these estimates may be revised due to recent events.
During the hostilities, the country’s economy effectively came to a halt: most businesses and schools closed, and operations were restricted. The compensations planned by the government are intended to support economic stability and help affected companies resume their operations.
Meanwhile, in the currency markets, there has been a recovery in the positions of the US dollar following news of a temporary ceasefire between Israel and Iran. This has generated a positive sentiment among investors and sparked interest in risk assets.
The Managing Director of the International Monetary Fund, Kristalina Georgieva, emphasized that US strikes on Iran could have far-reaching consequences that extend beyond just the energy sector, as the level of global uncertainty rises amid the conflict.