Confrontation with Iran will Impact the Enemy’s Economy Severely

By Staff, Agencies

The "Israel" Hayom newspaper warned that the security escalation against Iran, triggered by the assassination of Hamas political bureau chief Ismail Haniyeh, may lead to significant short and long-term consequences.

Hanan Herzog, lead economist at the consulting firm BDO, told “Israel” Hayom that "the security escalation and the continuation of the war may exact a heavy price from the Israeli economy."

He added: "The economic cost of escalating the war is greater in addition to the direct cost in the security budget and the increase in the deficit, and the increase in the "Israeli" risk premium may lead to an additional decline in the "Israeli" credit rating."

The speaker warned of potential decline in foreign investments, reduced export and import deals, and fear of international companies moving development and production centers to other countries due to war.

He added, "the continuation of the war increases the increasing price of the "Israeli" economy, the longer the situation continues and prolongs, the greater the accumulated economic damage, and it will be very difficult to restore activity after the end of the war."

He explained that during the first month of the war in October, the “Israeli” stock market fell more than 10 percent, noting that a worsening of the security situation and a full-scale war in another theater could exacerbate the stock market's decline.

He said that "the current "Israeli" credit rating is based on the scenario of no additional escalation and the end of the war before the end of 2024, but opening another arena may lead to an additional decline in the "Israeli" credit rating, pointing out that the escalation will lead to an increase in security expenditures."

"Failure to implement the goals of the budget could certainly lead to a credit rating downgrade and, of course, higher taxes," he concluded.