Economic impact of the Israel–Hamas war

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The 2023 Israel–Hamas war has significant economic implications, not only for the involved parties but also for the global economy.

Gaza

Gaza's infrastructure and economy

Main article: Economy of Gaza City

The war has caused devastating damage to Gaza's infrastructure and economy.[1] The war has resulted in upheaval and destruction on a scale never before seen in the enclave. The United Nations Office for the Coordination of Humanitarian Affairs (OCHA) reported that over 41,000 homes were destroyed and over 222,000 were damaged.[2] The war also badly affected hospitals, schools, water and sanitation systems, and food security.[1]

Employment in Gaza

The war caused significant job losses in Gaza. As the war reached its one-month mark, 61 percent of employment in Gaza, equivalent to 182,000 jobs, was estimated to have been lost.[3][4]

Israel

The war is costing the Israeli economy $600m a week due to work absences, according to the Bank of Israel. This is equivalent to about 6% of the weekly GDP.[5] On the other hand, Israel's treasury minister said the daily direct cost of the Gaza war to her country is about $246 million.[6]

It has been estimated that if the war went on for eight to twelve months, the cost of the war to the Israeli economy would be more than $50bn, or close to 10% of GDP, according to Calcalist, citing early Ministry of Finance figures. The estimates assume the conflict is limited to Gaza, without further escalation with other parties, and relies on the 350,000 drafted reservists returning to work soon.[7]

Lebanon

The olive trade in southern Lebanon, which is the main source of income for many, was halted as farmers stopped their harvests in fear of the active shelling.[8][9] According to the Minister of Agriculture, 40,000 olive trees were burned down by fires caused by IDF shelling.[10]

The Institute of International Finance predicted that Lebanon's GDP could decline by one percent by the end of the year and by 30 percent in 2024 in the event of further spillover of the war.[11]

Global economy

The conflict has the potential to plunge the global economy into recession.[12] War could have significant repercussions on Europe’s economic landscape, impacting it through reduced regional commerce, stricter financial regulations, escalated energy costs, and diminished consumer assurance. Goldman Sachs underscored that the most crucial and potentially impactful method that strain could permeate the European economy was via the petroleum and natural gas markets.[13]

Impact on countries

Bahrain

Bahrain's National Assembly suspended diplomatic and economic relations on 2 November,[14] citing a "solid and historical stance that supports the Palestinian cause and the legitimate rights of the Palestinian people."[15][16]

Egypt

Egypt, a nation grappling with a vulnerable economy, confronts further obstacles as a result of the ongoing conflict near the Gaza Strip. This confrontation possesses the capacity to disrupt the tourism sector and impede the importation of natural gas, thereby placing strain on Egypt's economy. The war in Gaza, unfolding along Egypt's border with the Sinai Peninsula, coincides with Russia's aggression towards Ukraine and the global impact of the coronavirus pandemic, both of which have laid bare the vulnerabilities of Egypt's economy.[17]

Brand boycotts

The brand boycott was a notable aspect of the war's economic implications. Brands such as McDonald's, Coca-Cola and Starbucks faced consumer boycotts over their support of Israel;[18] reflecting anger at Western governments' support for Israel.[19][20][21][22][23]

Campaigners in Derry, Ireland persuaded O'Neills to remove Puma products due to the sports brand's sponsoring of the Israeli Football Association.[24] Starbucks was targeted in Keighley, West Yorkshire, with protesters smashing the shop's windows, following the corporation's decision to sue the Starbuck Workers United union after the labour organisation posted on social media support for Palestine.[25]

See also

References

  1. ^ a b "Gaza war inflicts catastrophic damage on infrastructure and economy". Reuters. November 12, 2023 – via www.reuters.com.
  2. ^ "Hostilities in the Gaza Strip and Israel – Reported Impact" (PDF). United Nations Office for the Coordination of Humanitarian Affairs. November 9, 2023. Retrieved November 17, 2023.
  3. ^ "Israel-Gaza war 'devastating' Palestine economy, UN warns". Al Jazeera.
  4. ^ "Gaza loses 61 percent of jobs in Israeli war: UN". AhlulBayt News Agency.
  5. ^ "War is costing economy some $600m a week due to work absence — Bank of Israel". Times of Israel.
  6. ^ The daily cost of the Gaza war is 246 million dollars for Israel Retrieved 4 December 2023
  7. ^ "War with Hamas to cost Israel above $50 billion, Calcalist reports". Reuters.
  8. ^ Lebanon, William Christou ــ South (2023-10-21). "In Lebanon, war with Israel threatens the olive harvest". newarab.com/. Retrieved 2023-11-14.
  9. ^ Atallah, Nada Maucourant; Prentis, Jamie (2023-10-22). "South Lebanon farmers fear grim harvest if war breaks out". The National. Retrieved 2023-11-14.
  10. ^ Alkousaa, Riham (2023-11-02). "Lebanon says fires destroy 40,000 olive trees, blames Israeli shelling". Reuters. Retrieved 2023-11-14.
  11. ^ IIF says Lebanese economy is vulnerable to Hamas-Israel war L'Orient-Le Jour. 1 November 2023 - via today.lorientlejour.com/
  12. ^ "Wider War in Middle East Could Tip the World Economy Into Recession". Bloomberg. October 12, 2023 – via www.bloomberg.com.
  13. ^ Smith, Elliot (November 3, 2023). "Goldman Sachs says the Israel-Hamas war could have major implications for Europe's economy". CNBC.
  14. ^ "Bahrain summons envoy to Israel, suspends economic relations". Al Jazeera. Retrieved 2 November 2023.
  15. ^ "Bahrain expels Israel ambassador and cuts economic ties". Arab News. 2 November 2023.
  16. ^ "Bahrain recalls ambassador from Israel, cuts economic ties over Gaza war: Parliament". gulfnews.com. 2 November 2023.
  17. ^ Egypt's stumbling economy faces new pressures from Gaza crisis Retrieved 12 December 2023
  18. ^ Hendawi, Hamza; Oweis, Khaled Yacoub; Homsi, Nada (November 12, 2023). "Disillusion with the West amid Israeli strikes on Gaza fuels Arab boycott of brands". The National.
  19. ^ "Malaysians boycotting McDonalds, Burger King over support to Israel, Palestine responds". WION. 4 November 2023.
  20. ^ "Libya's Fatwa House issues Fatwa to boycott pro-Israel companies". The Libya Observer. 6 November 2023.
  21. ^ "There is a new front in the Israel-Gaza war: The marketplace". The National. 6 November 2023.
  22. ^ "Israel-Gaza war: Indonesian clerics issue fatwa boycotting products linked to Israel and Zionism". South China Morning Post. 10 November 2023.
  23. ^ "Disillusion with the West amid Israeli strikes on Gaza fuels Arab boycott of brands". The National. 12 November 2023.
  24. ^ Mooney, Rory (10 November 2023). "O'Neill's agree to remove Puma items from Derry store". www.derrynow.com. Archived from the original on 13 November 2023.
  25. ^ "The Lowdown: McDonald's and the pro-Palestinian protestors". restaurantonline.co.uk. 3 November 2023. Archived from the original on 19 November 2023.
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