IDF operations in Lebanon, including by the Air Force and Navy, which are leading the campaign, are very expensive, however, according to local experts Israel's war with Hizbollah guerrillas in Lebanon should not derail the state's strong economy as long as fighting ends soon.
Government officials believe that if the war is short, up to three weeks, its economic impact will be insignificant. Except for larger expenditures to finance the war and compensation for direct economic damage, the war will not cause a great loss in GDP.
The $130 billion economy has ridden a wave of positive sentiment since 2004 and is headed for a second straight year of growth above 5% on strong exports, a revival of consumer spending and heavy foreign investment.
Economic ministries in Jerusalem are already preparing for a long and expensive war that could cost NIS 5-10 billion, and will require extensive changes in the 2007 budget priorities.
Special funding will also be needed to pay compensation for life and property damage to people and businesses damaged and the shut-down of economic activity by Hizbullah Katyusha rockets against Israel.
Business leaders estimate the damage to the economy is as high as 500 million shekels ($112 million) a day in lost output from the full and partial closure of many of the more than 1,500 production facilities in the northern region, lower employment and empty hotels.
According to the Israeli Manufacturers' Association. less than 30% of factories in the north are operating normally and 35% of workers are only partly working.
