A ceasefire between Israel and Hezbollah entered into force on Wednesday, November 27, at 4 a.m. (3 a.m. Paris time) in Lebanon, after more than a year of cross-border hostilities and two months of open war between the Israeli army and the Lebanese movement armed forces supported by Iran. As soon as the imminent ceasefire was announced, the two main indicators of the Tel Aviv Stock Exchange posted increases. This trend continues and even strengthens since the entry into force of the truce on the Israeli-Lebanese border.
Simultaneously with the rise in the stock market, official forecasts anticipate significant growth in GDP: 4.3% for 2025, a considerable jump compared to the modest 0.4% expected for the current year. Israel is paying the price for the longest and most expensive war in the country's history. It is Bezalel Smotrich, the far-right Minister of Finance and fervent supporter of the continuation of the conflict, who recognizes this. For her part, Karnit Flug, former governor of the Israeli Central Bank, emphasizes that if the conflict continues, the shock to growth and economic activity will be inevitable and irreversible. Clearly, stopping the fighting is good for the Israeli economy.
The big winners from this ceasefire are the reservists, at least those who are self-employed. For them, the war was a real catastrophe also on the economic level. A record number of mini-businesses have closed their doors. In Tel Aviv and its suburbs, entire street stores have closed their doors permanently, the same goes for restaurants and cafes, not to mention the liberal professions. The reservists were well compensated, but they lost their customers after months spent in Gaza and then in southern Lebanon.
Conversely, Israeli military exports remain vibrant despite the war or perhaps because of the conflict. Since October 2023, the number of marketing licenses and export permits for defense products and systems has increased significantly, doubling in some cases. The results of start-ups are also good, some of which have partly relocated.
It is the tourism industry, one of the strong points of the Israeli economy in normal times, which is suffering the consequences of the war. Around 90 hotels have closed their doors since the start of the war. Nights in Israeli hotels fell by 29% compared to October 2023. What saved them from bankruptcy was the accommodation of some 80,000 displaced people in these establishments.
Paradoxically, the return home of the inhabitants of northern Israel, officially the main goal of the war in Lebanon, will considerably intensify the problem. After the drop in air traffic, Ben Gurion International Airport closed its low-cost terminal. Israeli companies have doubled, even tripled, the price of tickets. It will not be until the beginning of 2025 that most foreign companies will resume flights from Tel Aviv, provided that the ceasefire is respected.
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