NEW DELHI — The Covid-19 pandemic, resurgence of inflation, high borrowing rates and the Russia-Ukraine war -- the global economy which has endured one shock after another since early 2020, couldn't have asked for more.
The continuing Israel-Hamas war coupled with a persistently-high inflation is expected to slow down the world economy, which proved more resilient in the first half of 2023, and recession may set in if more countries join the conflict.
Oil prices have already risen by about $5 a barrel since the start of the October 7 conflict, and according to the IMF, a 10 per cent increase in oil prices could weigh down global growth by 0.15 percentage point.
The economic fallout of the deadly conflict, which entered its 56th day on Saturday, can already be seen in the two nations embroiled in conflict, along with the war-battered territories of Gaza and West Bank, where people have lost lives, loved ones and livelihood.
The Jewish nation started its war on Gaza with deep pockets having more that $200 billion dollars in forex reserves and billions in military aid from the United States.
Its economy has grown at a fast rate since the global financial crisis of 2008-09 and its GDP crossed $500 billion in 2022. In addition, the country has a net external creditor position exceeding 30 per cent of GDP.
But, according to new forecasts by the Israeli central bank, the war with Hamas will cost the country about $53 billion between 2023 and 2025.
The central bank expects the war will be a three per cent hit to Israel's GDP by the end of next year as businesses struggle with labour shortages and consumer demand remains weak, a Wall Street Journal report said.
A recent Labour Ministry report says that more than 760,000 Israelis, which is nearly 18 per cent of the workforce, are not working due to the war.
A third of restaurants in major Israeli cities have downed shutters since October 7 due to lack of employees as well as customers, local media reports said.
The shortage in workers is costing the economy a staggering $600 million a week, according to the country's central bank estimates.
Israel has now borrowed more than $8 billion since the start of the war with Gaza, causing the budget deficit to balloon to $6 billion, according to a report by US-based news outlet Medialine.
Before October 7, Israel had issued work permits to around 18,500 Gazan workers, and three days later, it revoked all labour permits held by them, effectively rendering their presence in Israel illegal.
According to The New Arab news outlet, thousands of these workers were then arrested “secretly and illegally” by Israel and were moved to detention centres without any legal basis, and the jewish nation refrained from disclosing their names and whereabouts.
Further, it released thousands of workers who had been detained and sent them back to Gaza on foot, without their belongings, beginning November.
A UN Development Programme (UNDP) report released in November revealed that around 390,000 jobs have already been lost since the start of the war.
The Palestinian Central Bureau of Statistics said the poverty rate in the Gaza Strip has reached 53 per cent, and a third of Gaza residents (33.7 per cent) are living in abject poverty.
Approximately 64 per cent of households in Gaza are without enough food, and unemployment is at 47 per cent – one of the highest rates in the world.
The UNDP report said at least 45 per cent of the housing stock in Gaza has been reportedly destroyed or damaged by Israeli bombardment.
Just weeks into the war, the Israeli army issued a new directive forbidding Palestinians from picking olives in the West Bank territory, harming their livelihood and self-sufficiency.
October and November are the main months for olive harvesting for the three million Palestinians on the West Bank.
Around 110,000 farmers directly profit from the olive harvest and another 50,000 people earn much of their livelihood from working with the trees and produce.
"The olive harvest season is usually a hugely special and joyful time for Palestinians, when families and friends come together to pick their olives and share food. But this year is very different," Riham Jafari, Coordinator of Advocacy and Communication for ActionAid Palestine, said.
"Farmers have been shot dead while harvesting their crops, while others have had their trees cut, uprooted, or set on fire. This is not just an attack in economic terms -- it is an attack on our very sense of national pride and identity as Palestinians," Jafari said.
Palestinians are reportedly boycotting products from Israeli companies, and almost 60 per cent of them have stopped going to work In West Bank.