Israel: The economic challenges ahead

On the surface, Israel's economy appears resilient, with growth for 2026 sitting at a solid 3.3% to 4%, while inflation continues to ease towards 1.6%. The stock market, which crashed by some 23% in the immediate wake of the October 7th attacks three years ago, has rebounded remarkably, climbing over 120% in the last three years. Yet, daily life tells a different story. Israel remains among the most expensive nations in the developed world, with food prices and high housing costs weighing heavily on the public. Today, around 20% of the population are living below the poverty line, especially the Arab community, who are disproportionately affected. Our situation here as Arabs is very sad. There's no equality. The war has destroyed us psychologically and financially. The outgoing government has postponed a wave of scheduled hikes on fuel, public transportation, electricity and water. But delaying these increases has not erased the underlying costs. It has simply shifted the bill into the future. At the same time, prolonged military conflicts come with staggering expenses. Since October 2023, direct government spending and total economic costs tied to the wars have neared $205 billion. With the defense budget increased to roughly $37 billion, public deficit has widened and national debt has risen to 67.2% of GDP. The pressing question for the upcoming administration is not just how much revenue needs to be raised, but how much of the true cost consumers will be forced to shoulder.