Can Israel’s economy sustain conflicts on multiple fronts?

The aftermath of the October 7 Hamas attack strongly tipped the scales in Israel’s priorities towards security. What began as a military response in Gaza expanded to conflicts spanning multiple fronts, including Lebanon, Syria, Yemen, Iraq, and Iran. But with revised growth forecasts, domestic concern about the country’s finances, and surging defence expenditure, is the Israeli economy really resilient to the shocks of its intensifying operations?

When the war broke out more than two years ago, Israel’s resilience stemmed from existing macroeconomic assets such as low debt-to-GDP ratio, high foreign exchange reserves and strong trade. But reports and data show that these assets are losing their standing.