War, Stocks and Labour Markets: Decoding Israel’s Economic Response to October’ 23 attack
War, Stocks and Labour Markets: Decoding Israel’s Economic Response to October’ 23 attack
By Dr. Divya Malhotra, Non-Resident Visiting Senior Fellow, CNSS
In the aftermath of the October 2023 Hamas attack, Israel’s economy faced immediate shocks—stock market crashes, a weakened shekel, and halted sectors like tourism, agriculture, and construction. Yet, the country demonstrated notable resilience through swift policy actions, including massive fiscal expansion, steady monetary policy, and strong institutional coordination. These measures helped stabilize the economy despite a sharp rise in defense spending and a labour crisis caused by the suspension of Palestinian work permits.
To fill the labour void, Israel forged migration agreements with India and other partner nations, bringing in thousands of foreign workers. While the long-term challenge of labour and fiscal stress persists, Israel’s experience underscores the power of economic agility, institutional strength, and diversified sectoral support. For India, this offers valuable lessons in conflict-driven economic resilience—emphasizing the need for robust macroeconomic frameworks, contingency planning, and flexible labour policies to absorb shocks and maintain growth momentum during strategic crises.