Al Mayadeen English

  • Ar
  • Es
  • x
Al Mayadeen English

Slogan

  • News
    • Politics
    • Economy
    • Sports
    • Arts&Culture
    • Health
    • Miscellaneous
    • Technology
    • Environment
  • Articles
    • Opinion
    • Analysis
    • Blog
    • Features
  • Videos
    • NewsFeed
    • Video Features
    • Explainers
    • TV
    • Digital Series
  • Infographs
  • In Pictures
  • • LIVE
News
  • Politics
  • Economy
  • Sports
  • Arts&Culture
  • Health
  • Miscellaneous
  • Technology
  • Environment
Articles
  • Opinion
  • Analysis
  • Blog
  • Features
Videos
  • NewsFeed
  • Video Features
  • Explainers
  • TV
  • Digital Series
Infographs
In Pictures
  • Africa
  • Asia
  • Asia-Pacific
  • Europe
  • Latin America
  • MENA
  • Palestine
  • US & Canada
BREAKING
Al Mayadeen's correspondent: The Lebanese Army is continuing its investigations and will later announce any information that does not affect the confidentiality of the investigation
Al Mayadeen's correspondent: It has not yet been determined whether the detainees belong to ISIS or another organization
Al Mayadeen's correspondent: Around 10 people of different nationalities, including Lebanese nationals, were detained
Al Mayadeen's correspondent: The Lebanese army arrested a number of people in the Matn area of Mount Lebanon with possession it has not disclosed
Gaza Civil Defense spokesman: We have strong indications that there are martyrs, injuries, and trapped people in the Salah al-Din area
Gaza Civil Defense spokesman: Citizens should avoid Salah al-Din Street because anyone who approaches it is at risk of being directly targeted
Gaza Civil Defense spokesman: Reality is that there is a very limited retreat of the vehicles, with the occupation forces providing cover undeer fire up to Salah al-Din Street
Gaza Civil Defense spokesman: Claims that the Israeli occupation has withdrawn from areas in the neighborhoods of al-Zaytoun, al-Tuffah, and al-Shujaiya are false
Hamas: The two delegations stressed that any negotiations must lead to the achievement of our people's goals and aspirations, foremost among which is ending the war and the complete withdrawal of enemy forces
Hamas: A delegation from the Hamas leadership, led by the head of the leadership council, Mohammad Darwish, met with an Islamic Jihad delegation, headed by its Secretary-General, Ziyad al-Nakhalah

Implications of continuing the war on 'Israel’s' economy: Report

  • By Al Mayadeen English
  • Source: INSS
  • 21 Aug 2024 19:51
  • 2 Shares
4 Min Read

An Israeli institution highlights the potential impact on the Israeli economy in three scenarios.

Listen
  • x
  • People buy fruits and vegetables in a local market in Haifa, occupied Palestine on August 16, 2024. (AP)
    People buy fruits and vegetables in a local market in Haifa, occupied Palestine on August 16, 2024 (AP)

The Institute for National Security Studies (INSS) in "Israel" revealed in a recent research paper that "Israel" now stands at a crossroads regarding the ongoing war on Gaza and confrontations with the Axis of Resistance, detailing that "every decision about the future will undoubtedly have significant economic consequences, especially considering that the projected budget deficit for 2024 is expected to exceed the forecast underlying the current state budget significantly."

The paper explores the economic impacts of three scenarios: continuing the war on Gaza, escalating tensions on the northern front, or securing an agreement that includes a captive release deal.

Continuing the war on Gaza

The INSS report predicts that In light of the current situation, the Israeli economy is expected to record only 1% GDP growth in 2024. 

With "Israel’s" risk premium at 1.75%, continuing the war could worsen it due to rising security costs, increasing the deficit and debt-to-GDP ratio. This may lead to economic instability. That said, the INSS explains that continuing the current situation could worsen the risk premium due to rising security costs, increasing the deficit and debt-to-GDP ratio.

"Israel" may be perceived as economically unstable, reducing the appeal of its risk assets. For 2025, low growth is expected at around 1%, with ongoing high budget deficits to fund security, potentially raising the debt-to-GDP ratio to 75% and negatively impacting "Israel’s" credit rating.

Related News

Abu Obeidah: Commander Deif wrote Palestine’s final liberation chapter

Israeli 'humanitarian city' plan jeopardizes Gaza ceasefire deal talks

Escalations in the North

The paper emphasizes the uncertainty surrounding how the next stage in confrontations will play out. However, even a scenario involving a month of intense confrontations in the north against Hezbollah alone—accompanied by unprecedented attacks on "Israel's" settlements—presents an extraordinary and highly challenging situation, it added.

In the scenario of an escalation in significant infrastructure damage, the Israeli economy could contract by up to 10% of GDP in 2024, the paper detailed.

The INSS report projects that the deficit could surge to approximately 15% to finance the war and meet essential needs, such as food, water supplies, transportation, and shelter. The contraction in GDP, combined with massive government spending, would lead to a debt-to-GDP ratio ranging between 80% and 85%.

The risk premium is expected to rise to 2.5% within a month of war, making fundraising more challenging, according to the paper.

Long-term economic consequences of Northern front

Any increase in the risk premium leads to a significant rise in interest payments on Israeli public debt, the paper stated, adding that a permanent one-percentage-point increase in the interest rate on public debt would result in an additional annual cost of over 10 billion shekels.

The INSS report highlights that bringing the debt-to-GDP ratio back to the recommended 60% level could take over a decade. It notes that the last time "Israel’s" debt-to-GDP ratio exceeded 80% was during the Second Intifada, peaking at 93% in 2003. Despite years of rapid economic growth, it wasn’t until 2017 that the ratio was finally reduced to 60%, underscoring the long-term challenges in managing such fiscal pressures.

Ceasefire agreement 

It is crucial to consider the severe conditions that could result from a northern war, the paper states, adding that the most significant risk lies in the potential for a drawn-out war on multiple fronts, where both sides "lack the incentive to reach a ceasefire".

The strategic benefits of such a war remain uncertain, especially when weighed against the extensive damage it could cause. Economically, this scenario is highly undesirable, making alternative exit strategies far more favorable.

  • Palestine
  • Israel
  • Israeli economy
  • Northern front
  • Israeli occupation
War on Gaza

War on Gaza

Most Read

Hezbollah SG reveals war details on Al Mayadeen for the first time

Hezbollah SG reveals war details on Al Mayadeen for the first time

  • Politics
  • 8 Jul 2025
Major ambush in Gaza kills 6 Israeli troops, injures dozens

Major ambush in Gaza kills 5 Israeli troops, injures 14

  • Politics
  • 8 Jul 2025
Israeli soldiers are seen in Beit Hanoun ahead of an operation by the al-Qassam Brigades, undated (Al-Qassam Brigades Military Media)

'Israel' on blast as media exposes report discrepancies in Gaza ambush

  • Palestine
  • 8 Jul 2025
Yemen Navy sinks ETERNITY C ship, shares footage of operation

Yemen Navy sinks ETERNITY C ship, shares footage of operation

  • Politics
  • 9 Jul 2025

Coverage

All
The Ummah's Martyrs

Read Next

All
The Freedom Flotilla ship Handala as it departs for Gaza, where it aims to break the maritime blockade at a port in Syracuse, Sicily in southern Italy on July 13, 2025. (AFP)
Palestine

Freedom Flotilla's Handala departs Sicily in bid to break Gaza siege

The container ship CMA CGM Laperouse, left, docks at the Georgia Ports Authority's Port of Savannah, Sept. 29, 2021, in Savannah, Ga (AP)
Politics

US shipbuilding woes deepen as tariffs, outdated policies backfire

Gaza war raises ethical questions for ex-Obama, Biden officials
Politics

Mercenary firm tied to Gaza war crimes hires Obama-Biden PR operatives

'Israel' targets children in Gaza collecting water
Palestine

'Israel' strikes Gaza kids fetching water, blames it on 'malfunction'

Al Mayadeen English

Al Mayadeen is an Arab Independent Media Satellite Channel.

All Rights Reserved

  • x
  • Privacy Policy
  • About Us
  • Contact Us
  • Authors
Android
iOS