The comparatively simple question of this analytical overview, which ardently aims to avoid falling for any side’s propaganda in the latest Arab-Israeli armed conflict since 1948, is an economic one. Does war, in the sense of armed conflict between states or state and quasi-state actors, pay in the 21st century in the short, medium, or long term?
This is a question of simplicity and even brutality – the best and most detailed economic balance sheet of any conflict is blatantly unable to capture and translate into quantifiable data the human price of a single collateral casualty, killed child, father, mother, or nonagenarian. Despite the topic’s apparently narrow scope, diving below the surface of the question and examining the seventh Israeli-Arab armed conflict through the lens of long-term implications reveals an incredibly complicated endeavor.
This is to say that it looks neigh impossible to undertake a full profit and loss accounting of the conflict that ensnared Israel, Palestine, Lebanon, Syria, Jordan, and Egypt on the horrible day of October 7, 2023 and exploded into uncountable horrors over the following two years until the supposed outbreak of good will in the Gaza Declaration of October 2025 and its ratification by the UN Security Council (UNSC) in its resolution 2803 on November 17 of this year.
An obvious first obstacle to such accounting is the fact that data are not only incomplete but also still in flux. While the flow of aggressions and atrocities has receded in recent months, destruction and violations of human life, health, and dignity are still wrought against individuals and families are ongoing as of this writing.
A correlated second obstacle to full accounting of conflict impacts is deliberate data opacity. The true extent of physical destruction and damages inflicted upon them has not been disclosed by several of the involved governments and non-state actors. Moreover, military expenditures on all sides are secretive at least in parts and undisclosed in realms such as information warfare, global online opinion manipulation, cyber-aggression and -defense, and traditional propaganda.
Uncertainty moreover defines real expectations and questions of future economic repercussions – and even upside risks through increased demand for “successful” weapons systems in international markets – from legal judgements and reputational and popular backlash. This uncertainty affects the estimation of costs of their conflict behavior to Israel more than the other polities under consideration.
A universal human impact factor, for which no exclusionary myths or pseudo-scientific fake narratives work, is the vulnerability of our species to mental trauma and anguish, with likely lengthy and costly detriments from the individual level to the global community. How productivity and peaceability will be restored for individuals who suffered life-altering injuries but perhaps are afflicted even more by issues from controlling anger to carrying lasting fears and psychological scars, is not really a question for which the study of wars in distant or recent centuries has ready answers.
Fundamental questions on the economics of war, post-conflict reconstruction, and opportunity cost of war – the non-allocation of funds to trade development, integration of supply chains and production chains, joint efforts in mitigating external risks, or adjacent strategic services sectors from tourism to culture that would have good return on investment –are impossible to answer predictively.
In terms of modern game theory, the world has become accustomed to evaluating economic and societal behaviors in terms of win-lose, win-win, win-win-win, and lose-lose outcomes. Win-lose, or zero-sum scenarios, run counter to the human propensity for reciprocal altruism and building of economic alliances with mutual benefits. Thus, productive individuals and even states have a strong taste for systems that facilitate growth such as seen in the 30 years following World War II or the 20 years of the great moderation at the end of the 20th century.
However, systems and models that have been developed during such periods, including existing economic models of leading international financial institutions (IFIs) of Bretton Woods heritage, have not been constructed with a view to global armed conflict. Other than for trade wars and commercial confrontations between and within states, they do not seem conceptually primed for evaluation of armed interstate conflict impacts or reversing the economic and societal burdens of war in a geographic context. This limits the value of consulting the wisdom of an IFI for understanding the real cost of the current conflagration in the Middle East.
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Cloudy mirrors of regional economic dynamics
Regrettably, the protracted and intense conflict experiences of all polities in the region, first among them Syria, Palestine, and Lebanon but also Egypt, Jordan, and Israel, are not mirrored well – or perhaps not at all – in the world’s go-to source for economic data and opinions, the World Bank Group (WB) and the International Monetary Fund (IMF).
The most recent IMF regional economic outlook for the Middle East, Pakistan, Caucasus, and Central Asia MENAP CCA does cover only four of the polities that Executive has been looking at, and those only partially and in disjointed descriptions. The latter dichotomy starts with definitions. In terms of country groupings, the IMF lists Egypt, Jordan, Lebanon, and Syria (as Syrian Arab Republic) under the sub-category of MENA countries. What most of the world today calls Palestine is labeled WBG by the IMF, for West Bank and Gaza. Israel, on the other hand is not covered in the regional economic outlook at all.
By analytical groupings, Egypt, Jordan, Lebanon, and WBG are listed as oil importing, emerging market and middle-income economies (EM&MIs). Syria, on the other hand, is listed as an oil-importing low-income country (LIC). Lebanon, Syria, and WBG are additionally noted as both fragile and conflict-affected states. For information on Israel, one has to consult another IMF publication, the World Economic Outlook, where the self-declared Jewish and democratic state is found in the category of “other advanced economies”, 17 jurisdictions that are not part of the G7 and Euro areas (but among which Israel is the sole country located in the Middle East).
Apart from these curious distinctions that fly in the face of geographic and socio-historic realities, the headline data recorded, estimated, and projected on the six polities and their economies are incomplete and inconclusive. Real GDP growth data for 2024, 25, and 26 for Israel can be found in the World Economic Outlook but, under the IMF’s logic, not in the regional economic outlook. Data sets for Jordan and Egypt are available for these three years. However, Syria’s economic fates are not reflected in GDP growth data and these data for Lebanon and WBG are displayed only for 2024. This leaves a void of three data points for Syria and two each for Lebanon and WBG, meaning seven out of eighteen data points, with the additional caveat that forward looking data are uncertain.
Researching correlations of economic and political trends, mutual influences, gaps in regional trade and integration, or differing impacts of armed conflict of differently grouped economies under the IMF lens is far from easy. Counterintuitive to the region’s heavy conflict experience between 2023 and 25, the IMF regional outlook posits that the economic performance of the region has been “generally robust in 2025“ and opens its first of two chapters by reiterating that regional economies have “shown resilience so far in 2025”, despite global uncertainty and tensions that included “a short-lived” conflict between Israel and Iran in June.
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Uncertainty and risks
The IMF says in its latest regional outlook – first chapter – that “GDP growth in the MENAP region is projected to strengthen in 2025 at a faster pace than anticipated in May”. As for risks, it cites primarily fiscal, monetary, economic and geoeconomic as well as climate risks and policy weaknesses for countries in the entire region. The report mentions, although not in a prominent manner, that geopolitical tensions remain a main risk for regional economies, with a specific acute risk of renewed escalation of the Iran-Israel conflict and the danger that “the unresolved Gaza crisis could undermine regional economic and trade stability to a greater extent than currently assumed in the baseline.”
A second chapter of the regional outlook highlights findings from a spring 2024 regional outlook: that in the MENAP and CCA regions, “output per capita remains, on average, about 10 percent below its pre-conflict trend a decade after the start of a severe conflict”. The chapter seeks to academically add to the discussion of factors that can be drivers of post-conflict recovery and advocates for “macroeconomic stabilization efforts, financing, including international support measures, and structural policies”. The chapter helpfully states that “boosting the chances of a successful post-conflict recovery requires a comprehensive strategy, calibrated to economy-specific circumstances” and cites the importance of further research.
The IMF’s sedate approach differs from papers by the World Bank that raised the ‘question of Palestine” in December 2024. Decrying the conflict’s “catastrophic impact on the Palestinian economy” the World Bank estimated the GDP contraction in 2024 at 26 percent and said that all sectors in Palestine had been severely affected, “with construction, manufacturing, services, and trade experiencing the most significant declines”. To address the country’s deep economic crisis and avert a socioeconomic collapse and further worsening of poverty “will require several critical and urgent actions from the Palestinian Authority, the government of Israel and the international community.”
Assessments without clear solutions
A wider assessment of the regional conflict landscape comes from the Armed Conflict Location and Event Data (ACLED) academic project and NGO, although these data offer no more insights into the economics of the conflict and eventual post-conflict economic solutions than the World Bank’s brief reference to Palestine’s national economy.
The intensity of conflict – tracked by ACLED – in 2024 saw Palestine as the polity suffering the largest impact of conflict in the world as analyzed under four categories of deadliness, diffusion, fragmentation, and danger. Syria and Lebanon were ranked in third and seventh place of most-afflicted locations. This ranking shows Syria as being 30 places higher in the ranking of conflict intensity than Israel. Egypt and Jordan were found less affected by further wide margins, at ranks above 70 and 100.
In the organization’s 2025 conflict index, Palestine and Syria were still ranked in first and third position for total conflict exposure. Lebanon dropped out of the top ten most conflict intense counties to a still very high total conflict intensity ranking of 19, Jordan and Israel also dropped further, but Egypt’s ranking indicated a slight increase in conflict intensity. According to ACLED, the conflict profiles of Eastern Mediterranean countries were embedded in a global conflict landscape where “high levels of conflict became the new normal”.
From a statistical analysis perspective, however, the conflict intensity in the region does not translate into a measure of the recent Israeli-Gaza conflagration’s economic dimension and the impairments of national productivity in countries affected by IDF actions. Similarly, the economic repercussions of the latest conflict in Palestine are not reflected in global analyses by the Australia-based Institute’s for Economy and Peace (IEP) which found in the 2025 Global Peace Index that the economic impact of violence across the world was equivalent to 11.6 percent of global economic activity.
IEP, which observes global peacefulness and this year rung the alarm over 17 years of incrementally declining global peacefulness, assesses the economic impact of violence per country based on numerous factors that extend beyond armed conflict impacts. Syria and Palestine are shown as two of the countries with the highest economic cost of violence as share of GDP in 24, stating this cost at 33.97 and 19.42 percent. This perspective, while indicative of the overall economic burden of violence to a polity in purchase-power-parity terms, is of limited utility for assessing the actual cost of the 2023 – 24 war and the October 7, 2023 terror incursion from Gaza into Israel.
Propaganda and war economics
It is undeniable that the propaganda, information warfare, and cybernetic dimension of militaristic and militant opinionating in the latest Middle East conflict involving Israelis and Arabs looms larger than at earlier times of warfare in history. Within the discourses of six polities covered in this report, debates of social constructs and partisan words of mass destruction from genocide to anti-Semitism have been embedding into the minds everywhere in reach of communication technology.
Deep fault lines and towering needs
Measuring and comparing economies in their geographic environments and also in their peer groups is standard practice for entities from the World Bank Group to the World Economic Forum. However, no reports of IFIs and global economic think tanks seem to offer analyses on the long-term cost and opportunity costs of regional conflicts.
Additionally, there were no uniform causes behind economic downturns and ultra-deep recessions in three of the territories. The economy of Gaza, but not of Palestine, was wiped out by bombings and ground intrusions between October 2023 and the October 2025 ceasefire (and the erasure continued in the month after the ceasefire); Palestine in its entirety nonetheless suffered an estimated GDP contraction of 26 percent in 2024.
The neighboring Lebanese economy, which took an estimated $6.5 billion dollar hit in war destructions and damages in 2024 and saw its GDP drop 7.5 percent, suffered its more severe meltdown – cumulatively estimated 38 percent of GDP for three years – starting from 2019 and entirely due to factors that were not prima facie caused by external conflicts. But it furthermore suffered impacts of undetermined magnitude from the peace waged by Israel in 2025.
The causes of the Syrian meltdown include economic sanctions, devastation from internal conflicts with the militants of the Islamic State (ISIL), and the corrupt politics and oppressive system of Assad dynasty rule from 1971 until December 2024. The need of rebuilding destructed infrastructure and real estate assets that were incurred due to internal strife between 2012 and 2018 was already estimated at $100 to 300 billion (in the Lebanon Economic Vision document of consultancy McKinsey).
The recent World Bank “conservative best estimate” of $216 billion cost of restoring physical assets – infrastructure and building assets – with a cited possible upside margin of another $129 billion, sounds like a safer bet for an analyst without skin in the game than for an imaginary master contractor who would enter a bid for the project. War impacts on Jordan and Egypt by contrast were indirect and concentrated in indirect impacts on shipping via the Red Sea – to Jordan through the Gulf of Aqaba and for Egypt because of rerouting of vessels away from its Suez Canal.
Impediments to tourism were less severe for both countries than for Palestine, Lebanon, and Israel. Other than that, by the feeble amount of data that are fully transparent, the cost of warfare for Israel was minor in terms of suffered destruction yet economically poignant in terms of economic losses incurred because of military duty obligations of many Israeli citizens and because of ordnance and weapons systems that had to be restocked after their use in defense, retaliatory sorties and punitive air raids directed at Gaza, Lebanon, Iran, Syria, and Yemen.
Fortunetelling for six polities
The economic future of the six polities is murky with more downside than upside risks for five of them and obfuscated with perceived upside risk for one of them. The cost of economic salvation – that is, the price tag of investments that would elevate Egypt, Syria, Lebanon, Jordan, and Palestine into a higher tier of income, employment, productivity, social safety and ecological sustainability – could range anywhere from one to three times their collective annual GDP estimated for 2024.
In numbers, that means costs of one trillion dollars are entirely in the realm of the economically, socially, and environmentally needed. Investment potentials, preliminary World Bank assessments, and rose-colored national plans suggest that a low-ball estimate of salvatory cost would exceed Syrian and Palestinian GDP each by multiples – estimated $214 billion for Syria and $70 billion for Palestine, versus estimated 2024 GDP values of $22 and 14 billion.
In Jordan and Egypt, current national development ambitions will require, at least, the equivalent of one-time national GDP in 2025, $58 versus 53 billion in Jordan and $400 billion (estimated by observers and consultants) versus $389 billion in Egypt. In Lebanon, the economic rebirth would require about two times to two-and-a-half times GDP of the current production of goods and services (including informal activities), if one assumes that the total price tag would be $80 to $90 billion and de-facto GDP for 2025 is more than $40 billion instead of the internationally cited $25 to 30 billion.
The five polities’ hunger for funding over a decade (or two or more) could be as low as $820 billion. Their real need for investments, however, could well range anywhere from one to 1.5 percent of global GDP, putting the need firmly above one trillion dollars. In this, the region’s fragile state of investment deprivation is not unlike the situation of a starving person who cannot dare to overeat if they want to regain their sustenance. But the source of sustenance – needed investments possibly worth more than a year of national GDP – is uncertain in the best imagination and laden with past failures of mobilizing needed amounts, whether from taxes, international financial institutions, friendly states, private sources, or as hybrid public-private partnerships.
Moreover, sweeping visions such as the Jordanian and Egyptian ongoing national development concepts have been researched and drawn up in the 2010s, as evident from frequent citations and references to the World Bank Doing Business series and the World Economic Forum’s Global Competitiveness Report and Index. Newer determinants of crucial economic potentials, metrics focusing on factors such as AI readiness and AI governance, are not part of the argumentation for investing in any of the Arab polities under purview. Matter of fact, all geo-economic indexes and rankings, whenever developed, show Israel in decidedly more enviable positions than its neighbors.
For Israel, the headline development equation is much different. With national GDP of $540 billion according to World Bank open data, the Jewish state has not seen a single year of GDP contractions since 1966, except for the pandemic year of 2020. By any numerical comparison to the regional neighbors, Israel is indeed in a different category of wealth and income, of technology adoption and industrial advancement, and of readiness for the digital age.
In this arithmetic, the economic outcome of the past 80 years is undeniably a zero-sum game, with Israel as the indisputable entry in the win column of the conflict balance sheets, including the balance sheet of the most recent conflagration. The idea of turning this win-lose constellation into a win-win reality of Middle Eastern economic integration in a frame of social, religious, and cultural peace has for the past five decades been pursued with willful blindness for the economic baselines of power. The investment needs for reaching a regional integration offering growth benefits to all its polities seems still utopian in light of political and security requirements.
The other option, that the obvious win-lose status quo is hiding a lose-lose future reality of immeasurable cultural and mental health cost, plus societal, climate and environmental repercussions that are to the detriment of the entire capitalist civilization is nothing but a speculation void of appeal under the proposition of reciprocal altruism. Similarly speculative is the idea that the changes of automation, where people leave the thinking to the machines for their superior processors, and further digitization will reverse the curse of this Faustian civilization’s and its protagonists’ unending search for knowledge, money, and power into a fascination with and quest for spirit, compassion, sustainability, and reciprocal altruism.
