Israel's economic recovery will remain restrained

Significance The war in Gaza, which began in October 2023, was initially expected to wind down within a few months, enabling economic activity to return to normal. Instead, the fighting has continued in Gaza and grown more intense on Israel's northern front against Lebanese Hezbollah. Impacts Turkey's trade suspension will likely result in a spike in the prices of food, automobiles and building materials. Instability in the West Bank is rising, increasing the risk of an active third front. US diplomatic activity will focus on preventing the reoccurrence of a direct Iranian-Israeli confrontation.