The Bank of Israel says the country’s economy lost about $57 billion (177 billion shekels), equivalent to 8.6% of annual GDP, during the two-year military campaign in Gaza.
The findings were published in the central bank’s 2025 annual report released on Monday, covering the period from 2023 through 2025, when Israel was engaged in a prolonged conflict with Hamas in Gaza following the group’s October 7, 2023 attack.
While the figure also encompasses military operations in Lebanon, it does not account for the costs of the ongoing US-Israeli war with Iran, now into its fourth week.
The central bank warned that the war has significantly altered Israel’s fiscal outlook, with weaker growth expectations and a widening deficit likely to push up debt levels.
Israel’s cabinet has already moved to address rising war costs, approving a revised 2026 state budget that adds $13 billion in spending.
Trade patterns have also shifted during the conflict. Researchers at the Bank of Israel found that exports to eight European Union countries considered more critical of Israel fell by $1 billion in 2024 and $1.5 billion in 2025, while trade with other partners increased.
The latest figures come against the backdrop of Israel’s war in Gaza, which began after Hamas launched attacks on October 7, 2023, triggering a prolonged military campaign, one that caused a fluctuation in the global oil market at the time.
Although a ceasefire took effect in October last year, Gaza’s Health Ministry says at least 680 Palestinians have been killed by Israeli fire, while Israel has reported four soldiers killed over the same period.
Overall, the war has killed more than 72,000 Palestinians since October 2023, according to Gaza authorities, with women and children making up a large share of the casualties. Independent researchers suggest the actual death toll could be significantly higher.