A report by the Israeli economic website "Globes" said on Thursday that the ongoing war in the Gaza Strip is bringing Israel closer to a sharp economic slowdown.

The current war has prompted the closure of key sectors of the economy, the withdrawal of a market workforce to the military, the closure of schools and educational institutions, and the suspension of the hospitality industry.

At dawn on Saturday, the Palestinian resistance movement "Hamas" and other Palestinian factions in Gaza launched Operation "Al-Aqsa Flood", in response to the continuous attacks by Israeli forces and settlers against the Palestinian people, their property and holy sites.

On the other hand, the Israeli army launched Operation Iron Swords and continues to launch intensive raids for the fifth consecutive day on several areas in the Gaza Strip.

The report predicted that Israel will see a decline in growth, as "private consumption activity will weaken as the war continues, and government deficits will widen due to higher spending and lower incomes."

In 2022, Israel's GDP grew by 6.5%, up from the Bank of Israel and the Ministry of Finance's forecast of 6.3%.

"Al-Aqsa flood" may increase inflation levels in Israel (Al Jazeera)

Globes touched on inflation in the local market and spoke of possible negative effects that lead to the return of high inflation again.

Lunin Menachem, chief economist at Mizrahi Tafhot Bank, said: "The initial effect is increased demand for public needs, especially basic consumer goods."

"Economic activity will be negatively affected, leading to a decrease in supply. This combination of effects will lead to higher prices in the short term."

"Another factor that can fuel inflation is oil prices, as for Israel their rise means a rise in fuel prices directly, and indirectly an increase in the prices of imported goods," he said.

According to the Globes report, the impact of higher oil prices will not stop at increasing the cost of goods, but will lead to an increase in the costs of war.


Multiple risks

An article by Adrian Pelut, an economic analyst in the newspaper "Calclist", reviewed the risks facing the Israeli economy at the moment.

He said that all parties, including economists, rating companies, international organizations and the press, confirmed that the risks facing Israel's economy were rising.

He added that the challenge in the battles taking place these days is doubled, stressing that the operation "Al-Aqsa Flood" is different from previous operations, as the damage will be clear.

All studies and tests conducted by economic bodies have shown that under previous military events and operations, the economy was able to recover quickly, but now the situation is completely different.

Billot said the current round of conflict was taking the Israeli economy to a turning point, and that the economy's cycle would shift from growth to slowdown and recession.