Official data reveal a significant economic downturn, with the national GDP reducing by nearly a fifth compared to the previous three months, a more severe drop than the 2.3% growth forecasted by the Bank of Israel. Over the course of the year, Israel's economy expanded by only 2%.

The hostilities have dramatically affected trade, causing exports and imports to plummet by 18.3% and 42.4%, respectively. The disruption has been exacerbated by halted flights and diverted international shipping caused by Houthi rebel attacks stemming from the conflict.

The Gaza war, initiated by a Hamas attack on October 7, resulted in around 1,160 deaths in Israel and over 29,000 in Gaza, with the latter figure primarily consisting of women and children, according to respective local sources.

The war has also led to significant labor shortages and the decimation of Israel's tourism sector. Following the attack, Israel mobilized over 300,000 reservists and restricted the entry of approximately 160,000 Palestinian laborers, which crippled the construction and agricultural industries.