10 Nobel Laureates in Economics: Israel on the Brink of Economic Catastrophe Due to Gaza

SadaNews - Israeli newspaper HaMarker revealed that 23 leading economists from universities in America and Europe, including 10 Nobel Laureates in Economics, sent an open letter to Israeli Prime Minister Benjamin Netanyahu warning that "current policies in the Gaza Strip will lead to catastrophic economic consequences."

The letter, described by the newspaper as unprecedented in its severity, emphasized that "Israel will pay a heavy economic price" if the current approach continues, particularly the starvation inflicted upon Gaza's residents, affirming that the risks are not limited to temporary pressures but threaten to undermine the entire structure of the Israeli economy.

Collapse of Investor Confidence

HaMarker pointed out that the warnings are not unfounded, as there are indeed alarming signals within the Israeli economy.

The most concerning signals have emerged from the real estate market, which has been one of the pillars of investment for decades, as it has been experiencing a significant exodus since October 2023. Wealthy investors have stopped buying apartments for more than a year, while tens of thousands have been sold over the past six months, particularly in Tel Aviv.

The report noted that "investors have become convinced that the next ten years will witness a prolonged downward trend in prices," which has led billions of shekels to flow out of real estate into the stock market.

The newspaper also highlighted that this shift in investor behavior reflects a deep loss of confidence, which weakens the government’s ability to stabilize the markets.

The report added that discussions regarding a "declaration of a labor dispute" and the possibility of a general strike reflect the scale of internal unrest, with accusations against the government of "fleeing from confronting the numbers" and ignoring the explicit economic indicators that reveal the depth of the crisis.

International Isolation and Risks of Personal Sanctions

Alongside local contraction, HaMarker’s report underscored economists' warnings about external risks.

The open letter hinted that Western countries might move toward imposing "personal measures" targeting government officials, including freezing assets in Europe, Canada, and Australia, and seizing properties and bank accounts.

The report quoted one of the participating economists directly: "If decision-makers are not held accountable directly, future generations of Israeli citizens will bear the cost."

The newspaper also linked these concerns to ongoing changes in the global economy, noting that "the situation in Israel is more fragile compared to previous experiences, such as the customs policies during Trump’s era," because the war simultaneously undermines internal confidence and economic infrastructure, significantly limiting the Israeli economy's ability to absorb shocks.

Gloomy Summary

In this context, HaMarker’s report concluded that Israel faces a dangerous mix of pressures, notably:

An internal crisis in the real estate market.

Escalating loss of investor confidence.

Threats of social unrest.

Downgrade of Israel’s credit rating.

Capital flight.

Brain drain, especially in the technology sector.

International isolation likely to turn into personal sanctions against officials.

The message signed by 23 prominent economists, including 10 Nobel Laureates, was described as a "final alarm bell," as it clearly warns that continuing Gaza policies do not only entail military or political costs but lead to an "imminent economic and financial catastrophe," as explicitly stated in the report.

Below are the names of the ten Nobel Laureates in Economics who participated in the letter:

Daron Acemoglu.

Angus Deaton.

Peter Diamond.

Esther Duflo.

Claudia Goldin.

Eric Maskin.

Roger Myerson.

Edmund Phelps.

Christopher A. Sims.

Joseph Stiglitz.

Source: Israeli Press

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