The attack by Hamas on Israel on Saturday has led to widespread casualties and deaths, and the declaration of war by Israel’s prime minister. From an economic perspective, the experience from the 2014 Gaza war suggests that the effects on Israel’s economy will be relatively small and short lived. But the situation is in flux and the economic effects will depend on the severity and length of the conflict, and the extent to which it spreads to the broader region. There are also important geopolitical implications, particularly if the tentative Saudi-Israel peace plan is derailed and/or it leads to greater tensions with Iran, both of which would add upwards pressure to oil prices.
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