factory damage 88 224.
(photo credit: )
Each day of IDF attacks in the Gaza Strip costs Israeli factories and businesses in the conflict zone NIS 4 million.
With the start of the military operations against Hamas in Gaza on Saturday morning, the Home Front Command has ordered the closure of enterprises in communities within 4.5 km. of the Gaza Strip. The Israel Manufacturers Association said Sunday that 80 factories were affected by the closure in the industrial zones around Sderot, Netivot and the Gaza Strip.
Since the first Kassam rocket hit in the South some eight years ago, factories have suffered direct and indirect damages estimated at NIS 100m., according to the association. The damages include direct losses from hits and indirect damage from lost orders, revenues, customers and workers.
Although it is too early to estimate the total cost of the ongoing operation in Gaza, economists warn that a prolonged one will have a serious impact on the economy and likely threaten Israel's credit rating.
"The impact of the military operation in Gaza is very much dependent on how long it will last and its development on the Israeli home front," said Ori Greenfeld, a macroeconomist at Clal Finance. "The main concern is that the military operation will be prolonged and the defense costs of the government in 2009 will increase, further widening the budget deficit far beyond the target range."
Burdened by the global financial crisis, a slowdown in economic activity and the expected downturn of tax revenues in 2009, Clal Finance forecasts the budget deficit to expand to 4.5 percent of gross domestic product, compared with the government's target of 1% of GDP.
"If costs skyrocket and revenues narrow further because of a standstill of economic activity in the conflict areas, the deficit is likely to expand, which in turn will affect Israel's debt-to-GDP ratio, and possibly have an impact on the country's credit rating," Greenberg said.
Other effects of an extended military operation could include a depreciation of the shekel and an increase in oil prices.
"The fighting in Gaza and the expected interest rate cut by the Bank of Israel on Monday will temporarily weaken the shekel against the basket of currencies," Leader Capital Market wrote in its weekly report.
On Saturday evening, Industry, Trade and Labor Minister Eli Yishai signed an order allowing essential businesses and factories to recruit workers in areas in which Defense Minister Ehud Barak declared a "special situation." The areas include Sderot and other communities near Gaza.
The order enables the recruitment of workers for essential private and public services such as emergency services, medicine, local authorities, food and equipment supply, communications, electricity and more.
So far, the order has been used to recruit workers for essential services in local authorities within 20 km. of the Gaza Strip including Sderot, Netivot and Ashkelon. Workers employed at factories defined as essential such as food production located within 10 km. of Gaza have also been ordered to come to work.
The Industry, Trade and Labor Ministry on Sunday opened an emergency information room for questions from small businesses, industry, employment, foreign workers, etc., which can be reached at 1-800-802-100 or (02)-666-2360 and via e-mail at email@example.com.
In addition, the Israel Electric Corporation said it increased its operations around the Gaza Strip by calling back employees from vacations and placing more workers around the rocket-stricken areas.
Businesses and banks around the country on Sunday announced wide-ranging discounts of their products and services for residents of rocket-stricken areas.
Starting on Sunday, Shufersal has been offering a 50% discount on all dairy and bread products at its 15 branches located around Sderot, Ashkelon, Ofakim, Kiryat Gat and Ashdod. Bank Leumi said it will offer Gaza periphery residents interest free loans of up to NIS 10,000 with no fees. Small businesses will be given a 1% discount on special loans of up to NIS 80,000 allocated for this sector, with the option of a six-month grace period for repayment.
Leumi Mortgages will freeze mortgage payments for three months. Bank Leumi has branches in Sderot, Netivot and two branches in Ashkelon. Bank Mizrahi Tefahot announced that on Monday it will take three buses of children from the "Reut - Afikim Negev" NGO in Sderot for a day trip to the Kiftzuba fun park outside Mevaseret Zion.
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