Israel's economy lost $57 billion during two years of Gaza war, bank report shows

Israel's economy suffered losses exceeding $57 billion during two years of conflict in Gaza, according to a report cited by Bloomberg on Monday. Data published in the 2025 annual report of the Bank of Israel showed that the country lost 177 billion shekels (around $57 billion), equivalent to 8.6% of its annual gross domestic product (GDP), between 2023 and 2025. The losses were largely attributed to the war in Gaza, which also includes the cost of Israeli attacks in Lebanon.

Iran war not included

The report does not include the economic impact of the ongoing conflict involving Iran, which has entered its fourth week, with Israel carrying out airstrikes and facing retaliatory attacks. Earlier this month, the Israeli Cabinet approved a revised 2026 state budget, adding $13 billion to finance the war effort, indicating that military expenditures continue to strain public finances.

Trade shifts

The report also noted shifts in trade patterns, with exports to eight European Union countries considered more critical of Israel falling $1 billion in 2024 and $1.5 billion in 2025, while trade with some other countries rose. "This pattern may indicate that political positions are influencing export volumes to these countries," the bank reported. The report added that the 12-day conflict with Iran last June alone reduced Israel's economic output by 0.3% of GDP.

Gaza war context

Israel launched a war on Gaza in October 2023, killing more than 72,000 Palestinians, wounding around 172,000 others, and devastating about 90% of civilian infrastructure. Despite a ceasefire reached last year, Israeli forces have since killed hundreds of Palestinians in Gaza. The economic toll of the conflict, now compounded by the Iran war and Lebanon front, continues to mount.