Direct costs stemming from state funding of the war effort and damage to civilian property and infrastructure will reach around NIS 47 billion, BDI said. It forecast a further NIS 24 billion in annual losses over a three to five-year period immediately following the war caused by a loss of foreign customers and collapse of about 10 percent of new small businesses.
BDI calculated its forecast by extrapolating from the costs of the Second Lebanon War in 2006. That war lasted 34 days, reducing growth by 0.5% and imposing direct costs of NIS 8 billion on the economy. The combined cost totaled 1.8% of Israel’s GDP at the time of NIS 633 billion.
Given that GDP reached around NIS 870 million in 2011, it should be assumed that another war of the same scale and duration would cause around NIS 16 billion in damage to the Israeli economy, BDI said.
However, it pointed out that most of the damage from the Second Lebanon War occurred in northern Israel, which produces only 20% of GDP. In the event of a war with Iran, it is reasonable to assume the damage would also include the center of the country, which produces about 70% of GDP, it said…Read More>>