By Micah Jonah, February 19, 2026
Since the outbreak of the Israel-Gaza war in October 2023, billions of dollars have been expended directly and indirectly by Israel, with far-reaching economic consequences both domestically and internationally.
According to figures released by the Bank of Israel, the overall economic toll of the war is estimated at 352 billion shekels (approximately $112bn). This includes about 243 billion shekels in direct defence spending, 33 billion shekels allocated to property tax compensation, 57 billion shekels in civilian expenditures and 19 billion shekels in interest payments.
Israel’s former chief military economic adviser, Gil Pinchas, previously estimated that the Gaza war alone had cost about 150 billion shekels ($48bn) as of early 2025, with daily expenditures averaging roughly 300 million shekels ($96m).
While detailed breakdowns of military spending remain largely classified, Pinchas indicated that Israel has allocated hundreds of billions of shekels towards munitions procurement and defence logistics since the conflict began. A portion of these funds has reportedly been channelled into domestic arms manufacturers, partially offsetting broader economic impacts.
Beyond munitions, manpower has significantly contributed to costs. Of Israel’s approximately 465,000 military reservists, more than 300,000 were reportedly mobilised during the first year of the war, in addition to about 170,000 active-duty personnel. Israel’s treasury estimates that about 70 billion shekels ($22.3bn) has been spent on reservist forces during the conflict.
The economic impact extends beyond defence budgets. The Bank of Israel estimates that each month of reservist service results in an average of 38,000 shekels ($12,100) in lost productivity per individual, underscoring the strain on the civilian economy.
Internationally, the United States has played a significant role in supporting Israel’s military operations. A 2025 report by Brown University’s Costs of War project estimated that Washington has provided approximately $21.7bn in military aid to Israel since October 2023. Additional US operational expenditures in the region reportedly range between $9.65bn and $12.07bn.
Meanwhile, the humanitarian and reconstruction costs in Gaza are projected to be substantial. The United Nations has estimated that rebuilding the enclave could cost about $70bn and take decades, citing extensive infrastructure damage and widespread humanitarian needs affecting Gaza’s 2.3 million residents.
With military spending expected to remain elevated in the coming years, Israeli economic analysts have warned that the long-term fiscal burden of the conflict could exceed 500 billion shekels over the next decade.
As fighting and diplomatic efforts continue, the financial, humanitarian and geopolitical consequences of the war are likely to shape the region’s future for years to come.
