Israel's GDP, credit rating inversely proportionate to money spent on war: Report

New Delhi: Though country's GDP is on a stey decline along with its credit ratings, a report says that Israel-Hamas wars incurs a cost of USD 269 million per day.

Although Netanyahu has me lofty claims of eliminating Hamas during wartime, claim comes at quite a cost, both on human level as well as monetarily as war is suspected to have cost Israel around USD 269 million each day since it began on October 7, an Al Jazeera report said.

In January 2024 Israel came out with a USD 15 billion budget for its war with Hamas. Prior to that in December 2023, it was clear that funds that were assigned for purpose were nearly not enough, as an ditional USD 7.85 billion was funded through increased borrowing.

Later, Netanyahu's cabinet approved an increased budget for 2024 and allocated an ditional USD 15 billion for war. This took estimated expenditure to over USD 22 billion but also took money away from education and healthcare consequently, which brought in severe criticism.

ditionally, in May 2024, Bank of Israel chief Amir Yaron warned country in a statement saying that waging war against Hamas would cost USD 67 billion, in defense and civilian costs between 2023 to 2025.

Consequently, Israel's credit score has severely downgred and its GDP has also declined.

Credit ratings agencies such as Fitch, Moody's and S&P Global downgred Israel's credit rating in 2024, citing worsening geopolitical risks as war drags on.

latest downgre of Israel's credit rating by Moody came in just after Israel conducted a major strike in Beirut, killing Hassan Nasrallah, leer of Hezbollah terror group. Though timing of Moody's announcement coincided with military action, agency clarified that its decision h been prepared in vance.

Israel's military spending, despite this, has been at an all-time high indicating that a furr downgre is possible.

Meanwhile, various stakeholders such as Israel, Hamas, countries like Egypt and Qatar, and Palestinians have incurred heavy losses in process.

Israeli government is also expected to permanently increase its military spending by close to 1.5% of GDP as compared to pre-war levels, reby pressurising country's budget deficit and debt levels, a Reuters report said.

Amir Yaron cautioned government to make fiscal justments to prevent budget deficit from going out of control due to jump in defense and or war costs. Prime Minister Benjamin Netanyahu said he expected country's rating would rise again once Israel wins war.

"Israel's economy is strong and is functioning very well. rating downgre is a result of Israel dealing with a multi-front war forced upon it," Netanyahu said in a statement.

But Israel's economy says orwise. With reduced consumer spending, exports and investments, country's GDP has not only declined but it has also resulted in plummeting of its overall economy.

As a result, Israel's economy only grew a meagre 2.0% in all of 2023 as compared to 6.5% in 2022.

In recent times, Israel's military spending has increased furrmore and this could le to a furr downgre in ratings.

Actions like settler violence in West Bank, seen by Israel’s own security services as a security threat, and justice minister’s attempts to weaken judiciary, have increased political instability in country.

Moody's has warned that increased defense spending, combined with a weakened economy, would furr strain public finances in months to come.