IMF says Israel-Gaza conflict already having economic costs

Arab-Israel Relations Materials 24 July 2014 20:59 (UTC +04:00)

Israel and Gaza are already facing economic costs from the fighting between them that has raged for the past two weeks, a spokesman from the International Monetary Fund said on Thursday.

The fiscal cost to Israel is estimated at 0.2 percent of its gross domestic product, though that number could increase if the fighting continues for long, IMF deputy spokesman William Murray said, citing figures from "various sources," Reuters reported.

He said the Israeli economy, especially the tourism industry and small and medium-sized firms, has also been hit, and GDP growth could slow further if the conflict continues.

"However, we need to make clear that once the conflict ends, we expect growth in Israel to rebound relatively quickly," Murray said.

He added that without donor aid, Palestinian authorities will not be able to afford to reconstruct infrastructure and buildings after the conflict ends.

"Heavy damage to buildings, water and electricity infrastructure is already apparent, aggravating an already critical humanitarian situation [in Gaza]," Murray said.

"Absent additional donor financing, the Palestinian Authority does not have fiscal room to take on this additional burden [of reconstruction]."