As the world concentrates on the Israeli air forces efforts over the skies of Gaza, analysts are asking if the campaign will divert scarce resources away from pressing economic needs.
Consider the size of the issue. According to new IMF figures, Israel’s annual GNP (what she produces) per person stands at US$24,000. (Saudi Arabia – $21,220; UAE – $56,670).
The Tel Aviv stock market has dropped 1.5% in its first response to the campaign. Reservists are leaving work stations and putting on uniforms. Places of entertainment and tourist attractions in the south are empty. All this in light of a poor global economic outlook. And yet…..
Over the past decade, Israel’s economy has coped with an Intidfada, withdrawal from Gaza, wars in the north, and more. Until recently, growth remained around 5% per annum. In effect, Israel’s neighbours have forced her to develope a virtual technology for its economy. This allows the country to find success despite war rather because of peace.
If you are a high tech geek, you may call it a perverse form of search engine optimization technology – looking for a way through the clouded cyber space of war.
Specifically, regarding the events in Gaza:
- Yes, industry in the south is winding down. There again, nearly, 8,000 Kassam rockets and mortars have landed in the region over 8 years, so these companies have been on a reduced footing for a long time.
- Hotel bookings around Ashkelon are down (except for journalists). Again, I openly admit that people like myself have long stayed clear of Ashkelon for family holidays. So not much change there.
- Aside from one-person businesses or SMEs in general, most organisations will continue to functions, especially in the Israel’s commercial centres further to the north.
The future? Who knows. Certainly reduced economic activity to begin with, but no disaster. Much will depend on the length of the military scope and the potential horrors that Hamas have threatened to launch against Israeli civilian targets. And it is a threat not to be underestimated.
For the moment, Israel’s economy looks to be safe and under good management.