Iran’s Response action on Sunday led to a minor loss on the Tel Aviv Stock Exchange. The Israeli economy has been significantly affected by the turmoil in the Middle East and the ongoing conflict with Hamas.

The primary index, TA-35, tracking the 35 largest companies on the Tel Aviv stock market, was slightly lower on Sunday morning compared to the previous day. However, this decline is relatively moderate compared to the sharp drop following Hamas’ attack on October 7, when the TA-35 plummeted by 8 percent, marking the steepest decline in at least three years.

Moreover, oil prices are on the rise due to tensions between Iran and Israel. Friday saw oil prices reaching a six-month high amid fears of disruptions in oil supplies from the region following Iran’s attack on Israel.

The unrest in the Middle East has taken a toll on the Israeli economy in recent months. In the last quarter of 2023, Israel’s Gross Domestic Product (GDP), representing all earnings of citizens and businesses, dropped by nearly 20 percent. This decline can be attributed in part to reduced consumer spending, as many Israelis were called up as reservists to bolster the Israeli military against Hamas. These reservists, who typically contribute to the economy, now spend significantly less as they serve in the military.

Furthermore, mobilizing a large number of reservists has drained the Israeli economy of valuable labor force, with hundreds of thousands leaving vacant positions to serve in the military.

Looking ahead, Israel will continue to face the consequences of the ongoing war. The Iron Dome, Israel’s missile defense system, has been working overtime to intercept rockets. The system’s efforts to fend off drones and cruise missiles from Iran incur substantial costs, with each intercepted rocket estimated to cost the country over 35,000 euros.

Despite the persistent war and its economic ramifications, the government remains optimistic. According to Israeli authorities, the country faced greater challenges during the COVID-19 pandemic. The government predicts a 1.6 percent economic growth for 2024, as reported by the American news agency Reuters.