Bank of Israel Governor: War expenses will reach $67.6 billion
Bank of Israel Governor Amir Yaron estimated that the war expenses on the Gaza Strip would reach 255 billion shekels ($67.6 billion).
The Israeli Knesset quoted Yaron as telling the Parliamentary Finance Committee, Monday, that direct war expenses for the years 2023-2025, including compensation and other civilian expenses related to the war, will reach 215 billion shekels.
He added, according to a statement, “Israel is losing tax revenues worth 40 billion shekels… Expectations for the years 2023-2024 indicate a growth rate of 2% each year”.
He said, “In 2025, the growth rate is expected to reach 5%… This is what was stated in the forecast scenario, which indicates a decline in combat operations (the war on Gaza) during the first quarter of 2024”.
The Bank of Israel estimates indicate that the economy will grow by only 1.5% in 2023, and its data is expected to be released by next month, and with the addition of the natural increase in population, the economy will practically witness zero growth.
While Bank of Israel data indicated economic growth in 2024 at 3.4%, which is the same as the IMF’s expectations, post-war expectations indicate growth at 0.4% during the current year.
Yaron added, “We expect inflation to continue to moderate, but there is a lot of uncertainty surrounding that, such as the events on the northern border with Lebanon, and that is why we are taking deliberate and calculated steps”.
He continued, “Inflation risks are linked to the housing market, and if the supply of apartments isn’t increased, through foreign workers or the return of a portion of Palestinian workers, it’s likely that there will be an increase in prices”.
If there is a wave of high prices in the agricultural sector, “this will be reflected in the food market,” according to the Governor of the Bank of Israel.
He stated that Israel entered the war, “and we are doing well financially… Israel has had a good experience with regard to emerging from previous security events”.
He considered that “global trade is currently below average and it affects us in Israel, and we see that there is an increase in transportation costs due to what is happening in the Red Sea”.
