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Thursday, October 19th, 2023 1:43 pm EDT
Key Points
- Military Standoff: Israeli ground troops have amassed near the border with Gaza in response to Hamas’ recent terrorist attacks, which resulted in a significant number of casualties. However, a ground invasion, which was expected by many, has not yet begun. This delay is surprising military analysts.
- Economic Impact: The ongoing conflict has left a significant impact on Israel’s economy. Over 360,000 reservists are away from their jobs, leading to a drop in productivity. The tourism industry, in particular, has been severely affected, with people not going out to eat or shop.
- Financial Concerns: The financial world is closely monitoring the situation. Fitch has placed Israel’s long-term debt on rating watch negative, indicating a potential credit rating downgrade. There are concerns about the conflict lasting a long time, and Prime Minister Benjamin Netanyahu has warned of a “long war.” The complexity of fighting in Gaza and fears of conflict with Hezbollah add to the uncertainty.
This article discusses the current situation in Israel and Gaza. Israeli ground troops are positioned near the Gaza border following terrorist attacks by Hamas. However, a ground invasion hasn’t started yet, raising concerns among military analysts. This conflict is also impacting Israel’s economy, with over 360,000 reservists called into duty, affecting productivity. The economic fallout includes a drop in tourism and reduced consumer activity.
Fitch has put Israel’s long-term debt on rating watch negative, signaling potential credit rating downgrades due to the prolonged conflict. The fear of other hostile actors like Iran and Hezbollah becoming involved is adding to the uncertainty. Prime Minister Benjamin Netanyahu has warned of a “long war” as the complexity of fighting in Gaza has delayed the next phase. Additionally, there are concerns that a ground invasion in the south could lead to a Hezbollah invasion from Lebanon in the north.
The economic impact is significant, with younger reservists, who play a vital role in Israel’s technology sector, being called to duty. Israeli companies, like cybersecurity firm Varonis, are adapting to the situation, with employees working from home. However, the war’s duration is increasingly becoming a long-term concern, and former Minister of Defense Benny Gantz has suggested that the fighting may continue for months, contrasting with Israel’s 2006 war with Hezbollah, which lasted 34 days.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/10/19/israel-recession-likely-as-war-drags-on-economist-says.html
