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Israel's Economic Miracle during Wartime Defies All Predictions
(Jewish Chronicle-UK) Saul Sadka - After 28 months of conflict, Israel's longest and most expensive war was predicted to break its economy. The opposite has happened. The cost of the war has pushed the country's external debt from 60% to 70% - still a figure the peacetime economies of the UK and the euro zone could only dream of. Remarkably, Israel's GDP has grown from $525 billion in 2022 to a projected $650 billion this year, and its GDP per capita has now surpassed the EU average. Elevated levels of military exports are likely to be the most direct economic boon from the war. Israel has demonstrated its home-grown technology in real combat conditions and under the scrutiny of the entire world. Making this war the dominant global news story for nearly two years has only benefited the reputation of Israel's defense industry. Israeli defense exports hit a record $15 billion in 2024, marking a fourth consecutive year of growth. The catastrophic performance of Russian equipment in Ukraine will remain a marketing disaster for decades to come. This opens a large opportunity for Israel to supply former Russian clients in Africa and Asia, India in particular. In the early months of the war, dark rumors circulated about the imminent collapse of Israel's high-tech sector, which accounts for 20% of GDP and more than half of exports. These fears have proven unfounded. On the contrary, growth accelerated throughout the conflict, with cybersecurity and fintech emerging as standout sectors. In addition, Israel is finally achieving energy independence. It is now largely self-sufficient in natural gas, which generates over 90% of its electricity, replacing coal. Israel exports gas to Jordan and Egypt - an arrangement that is not only economically beneficial but strategically significant. It is difficult to go to war with a neighbor who can shut down your power supply overnight.