Business data firm estimates cost to economy from Iran attack at NIS 47b
The business information firm BDI-Coface estimates the cost to Israeli economy would be compounded by a NIS 24 billion in lost gross domestic product every year for up to five years.
War with Iran would directly cost the Israeli economy about NIS 47 billion, economists from the BDI-Coface business information firm estimated in a report released on Monday.
This would be compounded, they said, by a NIS 24 billion in lost gross domestic product every year for up to five years.
The total cost of a war with Iran , which anlaysts say is likely if israel stages an attack on Tehran's facilituies, would likely reach NIS 167 billion, according to data released by the firm on Monday. The analysis is based on damage suffered by the Israeli economy during the Second Lebanon War in 2006.
But it assumes that any future conflict with Iran would imflict damage on the center of the country - not just the north, as was the case in the last Lebanon war.
Before the current insurgency in Syria, it was assumed that Syria might enter the conflict as well. But in light of the current situation, Syrian involvement is now considered less likely that Syria would join the fray.
According to BDI's data, the Second Lebanon War, which lasted 32 days, cut Israel's gross domestic product by 0.5%. In addition, it directly cost about NIS 8 billion in damage to civilian property and infrastructure, as well as the cost of actually waging the war, including replenishing weapon stocks.
Based on those figures, a war of the same dimensions and duration today would cost Israel about NIS 16 billion, BDI economists say. But that war was confined to the north of Israel, they note, where only 20% of the country's economic activity is based.
BDI notes that any conflict with Iran would also likely hit the center of the country, where about 70% of its economic production is located. Last year, economic production from the central region amounted to NIS 870 billion.
As such, a war with Iran that hits the center of Israel would cost about NIS 47 billion, economists estimate. Among the major losses Israel would sustain are loss of cexport sales and the collapse of business, particularly small ones, BDI states.
The projected loss of GDP - NIS 24 billion per year, for five years - is based on the conservative assumption that about 10% of small new businesses with an average annual turnover of about NIS 20 million would collapse due to an economic slowdown, lack of sufficient capital and a drop in demand.