Economic Repercussions of the War in Israel

 The war between Israel and Gaza has been an extremely tragic event going on. The fighting we have seen is terrible, but this is not the only bad thing taking place. At the start of the fighting the first thing to be affected was oil prices, also the most short-run issue. Oil barrels have already increased about $5 a barrel and this increase in pricing is expected to continue. If prices continue to rise it is estimated that the increased oil prices could weigh down global growth by 0.15 percentage point. Oil importers such as Pakistan are already facing economic struggles. There has also been a halt to gas production which has caused gas prices to go up. European gas prices are being affected the most at the moment, and if their gas supply continues to get cut thinner than prices will have to keep rising. Domestically, long-term interest rates have increased which suggests concerns that the higher energy prices will result in inflation, tightening monetary policy. 

Israel's economy has been impacted heavily due to the war. Government spending has increased due to the increased military efforts and paying for securities for their citizens, the labor force has dropped, tourism has dropped, and investment has dropped. Additionally, the shekel has dropped 5% since early October. This caused the bank of Israel to try to stabilize the market, where they chose to sell up to 30 billion USD in foreign exchange reserves. Clearly, this war has had a negative affect on Israel as a country but economically they are really feeling the affects as well. They are losing a substantial amount of money and their economy is getting hammered from the reduction in workers in the workforce which is causing less spending. Hopefully this war ends soon because war and death are just bad and we do not want to see anyone suffering. However, this war also needs to end so that all of this economic in balance can become a thing of the past and markets can get back to a more stable place.