Israel Heading Toward Economic Shock – Everyone Will Have to Pay
Israel may face serious economic pressure due to a sharp increase in defense spending, a shortage of military personnel, and the maintenance of significant budgetary commitments to the ultra-Orthodox sector. This combination could substantially limit…
Assessment
Israel faces a looming economic shock as defense spending has doubled since 2022 and may soon reach 180 billion shekels, pushing its share of GDP from 4% toward 7%. Combined with a shortage of soldiers and continued budget commitments to the ultra-Orthodox sector, the government's fiscal flexibility will be severely constrained in the coming years. The question is whether policymakers can reconcile these competing pressures before the strain becomes unmanageable.