After a month has passed since the war between Israel and Hamas, neighboring countries are facing significant economic challenges, especially Lebanon, Jordan, and Egypt.
The war has struck at their economic foundations, and its negative effects have directly and indirectly impacted all sectors, posing severe threats to economic growth, foreign reserves, domestic output, inflation, increased unemployment, and decreased investment.
Israel, of course, will not escape unscathed. It is likely that its economy will suffer serious consequences, with its real GDP expected to decline by 5 percent annually in the last quarter of 2023.
According to the latest reports from S&P Global Ratings, published on Tuesday, it is anticipated that the most significant damage from the war between Israel and Hamas will be felt outside the conflict zones, particularly in the tourism sector in Egypt, Lebanon, and Jordan.
The agency stated in a report released on Monday that these losses could range from 10% to 70% of total tourism revenues recorded last year, depending on the escalation of the conflict, the expansion of its scope, and its duration.
S&P Global Ratings presented three scenarios, with the most severe one estimating total losses in tourism revenues for the three countries at $16.1 billion.
It stated that the countries directly neighboring Israel and Gaza are particularly vulnerable to a slowdown in tourism, contributing to 12%-26% of their current account revenues, generating foreign currency income, and creating job opportunities.
Tourism revenues have increased by over 50% in Jordan and 30% in Egypt during the first half of 2023.
In Lebanon, the number of tourists has risen by 33% from January to August.
The tourism sector also provides employment opportunities for approximately 20% of the population in these countries, which is crucial given the high unemployment rates witnessed in the three nations.
