The Israeli Occupation’s aggression on Gaza continues to take a toll on the occupation’s economy, with the “Israeli” shekel deteriorating as the war persists.

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Recent reports indicated that “Israel's” international credit rating is declining. The lack of a political resolution for Gaza adds to the uncertainty, leading to concerns about future price increases in “Israeli” markets.

Investors are wary of the political instability and the continuous war in Gaza, causing the value of the shekel to drop. The exchange rate with the US dollar has fallen to less than 3.6 shekels, indicating growing pessimism among investors.

This was further exacerbated following Israeli Occupation Prime Minister Benjamin Netanyahu's remarks about “Israel's” readiness to take "very strong action" against Hezbollah.

Investors in the “Israeli” market are closely monitoring the security situation along the Palestinian-Lebanese border after Hezbollah rockets caused extensive fires in northern “Israel's” Kiryat Shmona, as reported by the Hebrew economic newspaper Calcalist.

The tension has had repercussions on the Tel Aviv Stock Exchange (TASE) index, which saw a decline of 35 points.

With the war entering its ninth month, there is a realization among investors that a permanent ceasefire seems unlikely, prompting them to sell shekels. This weakens the currency, making imports more expensive and driving up costs for consumers.

Beyond the depreciation of the shekel, “Israel” faces other economic challenges. Fuel prices, tied to the dollar, have surged, impacting households' monthly expenses. The government's decision to cancel fuel subsidies has further exacerbated the situation, leading to a significant increase in fuel prices.

These economic burdens are felt by “Israeli” families, with rising transportation, production costs, and electricity prices. Moreover, the budget deficit has soared due to increased military spending and reduced revenue, leading to discussions about raising value-added tax (VAT) to 18 percent by 2025.

 - “Israel's” budget deficit rises - 

Moreover, the “Israeli” Ministry of Finance revealed on Sunday that the budget deficit for the 12 months ending in May has widened to 7.2 percent of GDP, up from 6.9 percent in the previous 12 months ending in April.

According to the ministry, the deficit for the 12 months reached 137.7 billion shekels (USD 37 billion), with projections for the total deficit for 2024 estimated at around USD 33 billion. This increase in deficit is primarily attributed to extensive military spending for “Israel’s” prolonged war on Gaza.

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The cumulative deficit from the beginning of 2024 until the end of May reached USD 13 billion, compared to a yearly surplus of USD 3.5 billion. In May alone, the deficit stood at 10 billion shekels (USD 2.9 billion), but excluding tax payments postponed due to Passover, the deficit rose to approximately 14.8 billion shekels (USD 4 billion), as reported by Hebrew financial newspaper Globes.