Israel-Hamas War: How the Economy Would Get Affected?

Nidhi Bindal Oct 20, 2023


The present conflict in the Middle East has exacerbated the humanitarian catastrophe. Approximately 1200 innocent Israelis died in the Hamas onslaught, which is another reason why these conflicts are regarded as tragedies in history. An equal number of Palestinians were killed in the Israeli counterattack due to retaliatory bombardment. The Israeli government has ordered the evacuation of millions of inhabitants from the northern section of the country in order to spare their lives until the situation is stabilized.

The conflict between Israel and Hamas is currently one of the key causes of global economic disruption, which has a greater impact on recession and inflation. According to economists, the situation has somehow become worse and could lead to the next major global shock, impacting people all over the world. In Israel, both men and women must be required to serve in the military forces. Women are only permitted to serve for 24 months, whereas men must serve 32 months. After that, they can be contacted in an emergency. These individuals are referred to as Israeli Reservists.

How will the IT Economy be Affected?

3,60,000 Israeli Reservists were summoned for quick deployment during this situation. The number of fatalities in Gaza had already reached thousands, and numerous other cities and nations were supporting them, escalating tensions on a global scale.

As a result of Israel's assault in 1973, the Opec Cartel's oil prices soared, which in turn led to higher costs for businesses and higher prices. This implies that as oil prices rise, inflation also rises, which in turn causes unemployment to rise. The word "Stagflation" originated as a result of the skyrocketing cost of living and the decline in economic growth. Geopolitically speaking, if oil prices rise sharply, there is a considerable likelihood of recession.

Because of the difficulties in international relations, the Israel-Hamas conflict has actually put the tech industry in danger. Local businesses are not the only ones affected; multinational corporations have seen a considerable decline in their revenue. In order to save and defend their nation, the majority of Israel's IT workers have been converted to reserve forces. There was also a notable decline in the share prices of several corporations, which led to higher inflation and increased unemployment.

Response and Challenge and Fears:

Either you say it is a response or a challenge, the Israeli economy would have to deal with a setback. As there is a reduction in staff, no innovations, no projects and a major loss to the Information and Technological Industry has led to an overall decline in the economy. People were in continuous fear for their lives, and their futures. But out of all this, the companies had to maintain flexibility in their operations.

The worry that Hezbollah in Lebanon will launch a similar attack after Hamas's surprise attack is one reason why there has been an increase in discussion of unity. Iran, Israel's biggest rival, generously supports both Hezbollah and Hamas, both of whom have thousands of missiles in subterranean launchers.

Deaths in Territories of Israel and Palestinian are higher as compared to the previous decade:

The conflict has long flared up in Gaza. Gaza is governed by Hamas, which denies Israel's right to exist and has been labeled a terrorist organization by the US government and the European Union, in contrast to the West Bank, which is under the control of the Palestinian Authority, which has discussed a two-state solution with Israel. This made it impossible for countries to give aid.

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One of the main reasons for the war was the tension between Israel and Palestinians. The Palestinians aim to create their sovereign state. This objective is currently unattainable due to Israeli defense of its boundaries, Israeli rule over the West Bank, the Egyptian-Israeli blockade of the Gaza Strip, and Palestinian internal politics.

At the same time, we are discussing not only direct losses in several sectors but also the fact that the country was already experiencing a crisis in attracting investment in the high-tech industry before the escalation. The fact that Israel is significantly more energy-independent today than it was 20 years ago may have a good impact on the situation, but the hazards associated with not fully resolving the pandemic's effects may have a negative one.

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