Israel's military spending surges as conflict with Hamas and Hezbollah strains economy
Summary: Israel's ongoing conflict with Hamas and Hezbollah has significantly increased military spending, rising from $1.8 billion monthly before the war to about $4.7 billion by the end of last year. This surge has raised concerns about the long-term impact on the economy.
The war has caused Israel's economy to contract by 5.6% in the months following the October 7, 2023, attacks, the worst performance among OECD countries. While there was a brief recovery, growth slowed to just 0.2% in the second quarter of 2024.
The Israeli government is facing tough financial choices, with rising debt and potential cuts to public services. The U.S. has increased military aid to Israel, totaling at least $17.9 billion since the conflict escalated, which may help stabilize the economy amid rising defense costs.
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