Israel’s Economy Under Pressure from War with Iran: A Year Set Back
WANA (Aug 20) – While the aftermath of the recent conflict between Iran and Israel continues to cast a shadow over the region’s political and security landscape, clear signs are now emerging of the deep economic toll the confrontation has taken on Israel’s economy.
The Hebrew-language financial daily Calcalist reported that Israel’s economy contracted by 3.5 percent in the second quarter of this year—a decline the paper says has effectively pushed the country’s economy back by an entire year. Citing figures from Israel’s Central Bureau of Statistics, the report noted that the business sector was hit hardest, shrinking by 7 percent. Meanwhile, GDP per capita dropped by roughly 4.4 percent.
Falling exports and a sharp decline in tourism have further compounded the downturn. The temporary closure of Ben Gurion Airport and a steep reduction in overseas travel by Israelis dealt a severe blow to the services and tourism industries.
A Time Bomb Over Israel’s Infrastructure
WANA (Aug 18) – A recent report by the Hebrew-language daily Israel Hayom about Iranian missiles striking the Bazan power plant paints a new picture of the fragility of Israel’s critical infrastructure—one that even domestic media could not conceal. According to the paper’s account, in the early hours of June 16, an Iranian missile […]
But the impact extends beyond statistics alone. The daily Israel Hayom revealed that during Operation Rising Lion—the 12-day conflict—an Iranian missile strike caused significant damage to Israel’s energy infrastructure, particularly the Haifa refinery. This facility supplies much of Israel’s fuel needs, and its disruption has led to widespread complications in industry, transport, and domestic energy supplies.
According to Israeli sources, full repairs to the refinery are not expected to be completed until September 2025—a timeline that will drive up energy costs and place further strain on the economy. Beyond the immediate financial burden, the attack has heightened public concerns about the vulnerability of Israel’s critical infrastructure.
Beersheba, Israel, after Iranian missile strikes, 24 June 2025 / WANA News Agency
Economic analysts warn that the combination of security and economic pressures could pose serious challenges to Israel’s growth trajectory in the coming years. Declining exports, rising energy import costs, and waning foreign investor confidence are all seen as factors that may deepen the recession.
In this context, the recent war with Iran has not only carried severe security implications but has also disrupted Israel’s economic foundations. Despite government efforts in Tel Aviv to cushion the blow with stimulus packages and support measures, the available data suggests that restoring the economy to its pre-war state will be a difficult and protracted process.
