Economist warns: Israel's war costs could reach 10% of GDP, raising urgent challenges

Economist warns: Israel 's war costs could reach 10% of GDP, raising urgent challenges.

Finance Minister Bezalel Smotrich recently introduced plans for Israel ’s national budget for 2025 , which include reducing expenses while funding the war effort.

With war expenses estimated at NIS 200-250 billion ( US$54-$68 billion ), the budget is aspiring to balance fiscal responsibility with the necessity of sustained war funding.

Israel is facing the risk of recession in this overall economic environment, says Chen Herzog .

Investments are declining, foreign direct investment are sinking, the appetite for investors to provide capital to Israel is declining, and credit rating companies are lowering the country’s grades.

Israel 's prime minister and finance minister are hesitant to cut obvious budget areas, like subsidies for the ultra-Orthodox .

The economy needs a substantial shift because today , Israel risks inflation and stagnation.

More liberal parts of Israel 's society are already dissatisfied with Netanyahu ’s government and its management of the war.

The longer the war drags on, the higher the risk premium for doing business with Israel .

The government's main role should be to ensure Israel remains a liberal, democratic, and safe country, Dr. Spitzer concluded.