Social:Economic impact of the Israel–Hamas war

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The 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

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]

By the end of December 2023, the Palestinian Central Bureau of Statistics estimated that the Palestinian economy had lost a total of $1.5 billion USD since the start of the conflict.[3]

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.[4][5]

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.[6] The bank also stated that the estimate does not reflect total damage and did not include damages caused by the absence of Palestinian and foreign workers.[7] On the other hand, Israel's treasury minister said the daily direct cost of the Gaza war to her country is about $246 million.[8]

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.[9]

The economic toll of this violence may cost Israel an estimated $400 billion in lost economic activity over the next decade – threatens Israel's economic future. For Israel, 90% of the economic shock will come from indirect effects: reduced investment, slowing productivity growth and labor market disruption.[10] Due to Israel suspending Palestinian work permits, it recruited workers from India and Sri Lanka to fill the gaps.[11]

Israeli claims of Chinese sanctions

Israel's high-tech factories reported on 25 December that they had been having trouble with electronic imports from China due to recent bureaucratic obstacles, leading to higher import costs and delayed delivery times.[12] Israeli officials also reported that China had refused to send workers to their country during the war against the backdrop of a worker shortage in Israel's construction and farming sectors.[13] China's actions were described as a de facto sanction.[14][12]

Global economy

The conflict has the potential to plunge the global economy into recession.[15] 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.[16]

Economic disruption in the world

In a recent report, the World Bank issued a concerning warning on October 30 regarding the Israel-Gaza conflict. according to the mentioned report, this conflict has the potential to cause a significant global economic shock. One of the potential consequences could be a drastic increase in the prices of items such as oil, with projections suggesting that it can reach as high as $150 per barrel. This would have severe implications for the global economy, leading to higher food prices and potentially causing millions of people to go hungry. The mentioned report drawed parallels to the 1973 war, during which Arab members of OPEC, led by Saudi Arabia, imposed an oil embargo on the USA in response to their support for Israel.[17]

Impact on countries

Bahrain

Bahrain's National Assembly suspended diplomatic and economic relations on 2 November,[18] citing a "solid and historical stance that supports the Palestinian cause and the legitimate rights of the Palestinian people."[19][20]

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.[21]

Indonesia

The ongoing conflict between Hamas and Israel is predicted to have repercussions on Indonesia's economy, specifically in the industrial domain. Bobby Gafur Umar, the leader of the Manufacturing Industry at the Indonesian Entrepreneurs Association (Apindo), highlighted that any turmoil in the Middle East would impact the business environment in Indonesia, particularly in the energy sector. A direct consequence of this war is the surge in energy prices, consequently resulting in a rise in the expenses associated with raw materials. This is primarily because Indonesia cannot produce all the required raw materials domestically.[22]

India

Indian experts are expressing their apprehension about the ongoing conflict, as they fear it may have adverse effects on the Indian economy. The escalating oil prices are expected to raise import costs, consequently leading to an increase in prices for commodities and food items. This situation poses a significant challenge for the Indian economy.[23]

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.[24][25] According to the Minister of Agriculture, 40,000 olive trees were burned down by fires caused by IDF shelling.[26]

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.[27]

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;[28] reflecting anger at Western governments' support for Israel.[29][30][31][32][33]

Campaigners in Derry, Northern Ireland persuaded O'Neills to remove Puma products due to the sports brand's sponsoring of the Israeli Football Association.[34] 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.[35]

Direct action was taken at arms factories in the United States and the United Kingdom that supplied arms to Israel, such as Lockheed Martin,[36][37] General Dynamics,[38] Textron,[39] Boeing,[40] L3Harris,[41] Raytheon Technologies and Northrop Grumman.[42] For instance, on 10 November 2023, trade unionists in Rochester, Kent, blocked the entrances to a BAE Systems factory, stating the facility manufactured military aircraft components used to bomb Gaza;[43] and on 16 November, Palestine Action occupied a Leonardo factory in Southampton, stopping production.[44] ZIM was barred from entering ports in Malaysia.[45]

See also

  • Effects of the Israel–Hamas war
  • International reactions to the Israel–Hamas war

References

  1. ↑ 1.0 1.1 "Gaza war inflicts catastrophic damage on infrastructure and economy". Reuters. November 12, 2023. https://www.reuters.com/world/middle-east/gaza-war-inflicts-catastrophic-damage-infrastructure-economy-2023-11-12/. 
  2. ↑ "Hostilities in the Gaza Strip and Israel – Reported Impact". November 9, 2023. https://www.ochaopt.org/sites/default/files/Gaza_casualties_info-graphic_9_Nov_2023%20final.pdf. Retrieved November 17, 2023. 
  3. ↑ Jadou, Monjed. "Palestinian industries falter as Israel bombs Gaza, locks down West Bank". https://www.aljazeera.com/news/2024/1/21/palestinian-industries-falter-as-israel-bombs-gaza-locks-down-west-bank. 
  4. ↑ "Israel-Gaza war 'devastating' Palestine economy, UN warns". https://www.aljazeera.com/economy/2023/11/10/israel-gaza-war-having-massive-impact-on-palestinian-economy. 
  5. ↑ "Gaza loses 61 percent of jobs in Israeli war: UN". https://fa.abna24.com/story/1409378. 
  6. ↑ "War is costing economy some $600m a week due to work absence — Bank of Israel". Times of Israel. https://www.timesofisrael.com/war-is-costing-economy-some-600m-a-week-due-to-work-absence-bank-of-israel/. 
  7. ↑ Script error: No such module "cite news".
  8. ↑ The daily cost of the Gaza war is 246 million dollars for Israel Retrieved 4 December 2023
  9. ↑ "War with Hamas to cost Israel above $50 billion, Calcalist reports". Reuters. https://www.reuters.com/world/middle-east/war-with-hamas-cost-israel-above-50-bln-newspaper-2023-11-05/. 
  10. ↑ From the Ashes of Hamas-Israel War, Can Economics Drive Peace? Retrieved 16 December 2023
  11. ↑ "Israel recruits from India, Sri Lanka to replace Palestinian workers". https://www.aljazeera.com/news/liveblog/2024/1/21/israels-war-on-gaza-live-deadly-israeli-attacks-across-gaza?update=2636806. 
  12. ↑ 12.0 12.1 Zomer, Navit (2023-12-25). "Israeli high-tech factories have difficulties importing components from China" (in en). Ynetnews. https://www.ynetnews.com/business/article/b1ze7rrda. ""The Chinese are imposing a kind of sanction on us. They don't officially declare it, but they are delaying shipments to Israel," a senior figure in one of the factories told Ynet. "They have various excuses and pretexts, such as requiring suppliers from China to obtain export licenses to Israel that did not exist before. Additionally, they demand that we fill out numerous forms, causing significant delays. This has never happened to us before."" 
  13. ↑ "Hebrew Newspaper: China imposes sanctions on "Israel" against the backdrop of the war in Gaza". Al-Quds. 25 December 2023. https://www.alquds.com/en/posts/105127. 
  14. ↑ "China delays shipments to Israel amid Gaza genocide; over 20,000 Palestinians killed so far". Free Press Kashmir. 25 December 2023. https://freepresskashmir.news/2023/12/25/china-delays-shipments-to-israel-amid-gaza-genocide-over-20000-palestinians-killed-so-far/. "Chinese actions are seen as a de facto sanction, as shipments are delayed under various pretexts, such as new export licenses and extensive paperwork demands, impacting the timely production of electronic products." 
  15. ↑ "Wider War in Middle East Could Tip the World Economy Into Recession". Bloomberg. October 12, 2023. https://www.bloomberg.com/news/features/2023-10-12/israel-hamas-war-impact-could-tip-global-economy-into-recession. 
  16. ↑ Smith, Elliot (November 3, 2023). "Goldman Sachs says the Israel-Hamas war could have major implications for Europe's economy". https://www.cnbc.com/2023/11/03/goldman-says-israel-hamas-war-could-majorly-impact-europes-economy.html. 
  17. ↑ Five Global Dangers from the Gaza War Retrieved 28 December 2023
  18. ↑ "Bahrain summons envoy to Israel, suspends economic relations". Al Jazeera. https://aje.io/k8y4b6?update=2457328. 
  19. ↑ "Bahrain expels Israel ambassador and cuts economic ties". 2 November 2023. https://arab.news/ybyzj. 
  20. ↑ "Bahrain recalls ambassador from Israel, cuts economic ties over Gaza war: Parliament". 2 November 2023. https://gulfnews.com/world/mena/bahrain-recalls-ambassador-from-israel-cuts-economic-ties-over-gaza-war-parliament-1.99148034. 
  21. ↑ Egypt's stumbling economy faces new pressures from Gaza crisis Retrieved 12 December 2023
  22. ↑ Entrepreneurs Association: Hamas-Israel War Will Affect Indonesia's Economy Retrieved 12 December 2023
  23. ↑ Israel-Hamas war: What could it mean for India’s economy?
  24. ↑ Lebanon, William Christou ــ South (2023-10-21). "In Lebanon, war with Israel threatens the olive harvest" (in en). https://www.newarab.com/features/lebanon-war-israel-threatens-olive-harvest. 
  25. ↑ Atallah, Nada Maucourant; Prentis, Jamie (2023-10-22). "South Lebanon farmers fear grim harvest if war breaks out" (in en). https://www.thenationalnews.com/mena/palestine-israel/2023/10/22/south-lebanon-farmers-fear-grim-harvest-if-war-breaks-out/. 
  26. ↑ Alkousaa, Riham (2023-11-02). "Lebanon says fires destroy 40,000 olive trees, blames Israeli shelling" (in en). Reuters. https://www.reuters.com/world/middle-east/lebanon-says-fires-destroy-40000-olive-trees-blames-israeli-shelling-2023-11-02/. 
  27. ↑ IIF says Lebanese economy is vulnerable to Hamas-Israel war L'Orient-Le Jour. 1 November 2023 - via today.lorientlejour.com/
  28. ↑ Hendawi, Hamza; Oweis, Khaled Yacoub; Homsi, Nada (November 12, 2023). "Disillusion with the West amid Israeli strikes on Gaza fuels Arab boycott of brands". https://www.thenationalnews.com/mena/2023/11/12/disillusion-with-the-west-amid-israeli-strikes-on-gaza-fuels-arab-boycott-to-brands/. 
  29. ↑ "Malaysians boycotting McDonalds, Burger King over support to Israel, Palestine responds". WION. 4 November 2023. https://www.wionews.com/world/malaysians-boycotting-mcd-burger-king-over-support-to-israel-palestine-responds-655052. 
  30. ↑ "Libya's Fatwa House issues Fatwa to boycott pro-Israel companies". The Libya Observer. 6 November 2023. https://libyaobserver.ly/news/libyas-fatwa-house-issues-fatwa-boycott-pro-israel-companies. 
  31. ↑ "There is a new front in the Israel-Gaza war: The marketplace". The National. 6 November 2023. https://www.thenationalnews.com/opinion/comment/2023/11/06/israel-gaza-boycott/. 
  32. ↑ "Israel-Gaza war: Indonesian clerics issue fatwa boycotting products linked to Israel and Zionism". South China Morning Post. 10 November 2023. https://www.scmp.com/news/asia/southeast-asia/article/3241131/israel-gaza-war-indonesian-clerics-issue-fatwa-boycotting-products-linked-israel-and-zionism. 
  33. ↑ "Disillusion with the West amid Israeli strikes on Gaza fuels Arab boycott of brands". The National. 12 November 2023. https://www.thenationalnews.com/mena/2023/11/12/disillusion-with-the-west-amid-israeli-strikes-on-gaza-fuels-arab-boycott-to-brands/. 
  34. ↑ Mooney, Rory (10 November 2023). "O'Neill's agree to remove Puma items from Derry store" (in en). www.derrynow.com. https://www.derrynow.com/news/home/1345231/o-neill-s-agree-to-remove-puma-items-from-derry-store.html. 
  35. ↑ "The Lowdown: McDonald's and the pro-Palestinian protestors". restaurantonline.co.uk. 3 November 2023. https://www.restaurantonline.co.uk/Article/2023/11/03/Why-McDonald-s-has-found-itself-the-target-of-apparently-pro-Palestinian-protests-this-week. 
  36. ↑ "Lockheed Martin: Palestine protesters install blockade". BBC News. 25 November 2023. https://www.bbc.com/news/uk-england-beds-bucks-herts-67519517. 
  37. ↑ "Anti-war protesters block access to Lockheed Martin subsidiary in St. Paul". MPR News. 10 November 2023. https://www.mprnews.org/story/2023/11/20/antiwar-protesters-block-access-to-lockheed-martin-subsidiary-in-st-paul. 
  38. ↑ "Pro-Palestinian Protest Outside General Dynamics". Daily Nebraskan. 10 November 2023. https://www.dailynebraskan.com/diversity_inclusion/gallery-pro-palestinian-protest-outside-general-dynamics/collection_58f97ac4-804e-11ee-b0a8-87a8bd3c9d5f.html. 
  39. ↑ "Hundreds gather for another protest outside of Textron Headquarters". ABC6.com. 17 November 2023. https://www.abc6.com/hundreds-gather-for-another-protest-outside-of-textron-headquarters/. 
  40. ↑ "Hundreds call on Boeing to stop weapons supply to Israel". Wafa. 9 December 2023. https://english.wafa.ps/Pages/Details/139947. 
  41. ↑ "Hundreds protest outside defence factories against arms being sent to Israel". Sky News. 7 December 2023. https://news.sky.com/story/hundreds-protest-outside-defence-factories-against-arms-being-sent-to-israel-13024799. 
  42. ↑ "Protesters Are Targeting Defense Contractors That Bragged About Profits from Gaza". Vice. November 17, 2023. https://www.vice.com/en/article/k7zkz9/protesters-are-targeting-defense-contractors-that-bragged-about-profits-from-gaza. 
  43. ↑ Luck, Flaminia (10 November 2023). "Israel-Gaza: Union members block arms factory in protest over conflict". BBC News. https://www.bbc.com/news/uk-england-kent-67378052. 
  44. ↑ Simone, Carlo (16 November 2023). "Leonardo UK profile as Southampton factory roof occupied by Palestine Action" (in en). Daily Echo. https://www.dailyecho.co.uk/news/23927518.leonardo-uk-amid-southampton-palestine-protest/. 
  45. ↑ "Malaysia bans Israel-flagged ships from its ports in response to Gaza war". https://www.aljazeera.com/news/2023/12/20/malaysia-bans-israeli-affiliated-and-israel-bound-ships-from-its-ports. 



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