Middle East: The Gaza and Yemen fronts continue to exert pressure across all aspects of the Zionist enemy’s structure—militarily, security-wise, and economically—even as other support fronts remain dormant.

While much attention has been given to the military and security ramifications of the strikes carried out by the Yemeni Armed Forces and Palestinian resistance movements, the enemy’s economic bleeding persists and is accelerating. This is despite increasing the 2025 budget and enacting various economic policies aimed at absorbing the blows it suffered throughout 2024.

These policies have so far failed to stem the economic hemorrhage during the first third of the year—even though active deterrence operations were largely suspended from January to mid-March. This indicates that the consequences of past strikes still linger and have been intensified by Yemen’s strategic attacks targeting the heart of the enemy’s economy through both aerial and naval blockades. Added to this are the ongoing effects of the resilient Gaza front, which continues to sap the enemy’s financial resources and manpower—especially through the mass mobilization of reservists, which disrupts economic activity and causes widespread business closures.

In a recent development, the so-called Governor of the “Bank of Israel” warned of a further slowdown in economic growth due to the ongoing war on Gaza.

In comments published by Reuters, he noted that the geopolitical instability in occupied Palestine and its regional repercussions are preventing inflation from easing in the near term. This could lead to renewed inflationary pressures, hinder interest rate cuts, and prolong economic stagnation—further damaging investments, depressing stock market performance, and weakening the shekel.

He added that the prolonged war on Gaza is expected to lower growth projections further, with significant repercussions on the entire Israeli economy—especially the labor market, which he described as the driving force of economic activity. He also predicted a rise in public debt, pointing to the scale of the ongoing economic drain.

The financial deficit is also expected to increase. Some officials from the so-called Israeli Ministry of Finance have already indicated that the 2026 budget will likely face a shortfall, implying that the current year’s budget is deeply unbalanced. These admissions reflect the regime’s determination to continue its aggression on Gaza despite mounting losses.

As of April, the fiscal deficit stood at 5.1 percent. Enemy financial officials acknowledged that military expenditures remain excessively high and may continue rising. This suggests that the deficit could surpass last year’s figure of 7 percent of GDP, even though the current budget is significantly larger than in 2024 and is backed by additional taxes and levies.

With an inflated deficit, soaring military spending, and declining investments and tourism due to Yemeni operations, the Zionist economy faces a deepening crisis. Analysts now estimate that recovery will take far longer than previously expected. In January, Zionist economists had optimistically projected a five-year path to stabilization after a ceasefire in Gaza. However, current data suggest that Israel’s economic malaise will be both prolonged and intensified.

The enemy’s central bank further confirmed—during the so-called “Annual Economic Conference of the Israeli Democracy Institute”—that the composite index of economic activity for April dropped by 0.10 percent. This decline was attributed mainly to a sharp decrease in goods exports and shrinking domestic purchases. The economic slowdown is being driven by Yemen’s aerial blockade and the resulting price surges, while the naval embargo on Haifa Port is expected to further suppress exports, imports, and overall production. This could trigger unprecedented price shocks and complicate the economic outlook even more.

The drop in consumer purchases is also linked to the collapse of the tourism sector, which has plummeted by over 70 percent due to the air blockade. Additionally, Yemeni strikes are triggering broader consequences, including increased reverse migration, the flight of investors and capital holders, and the departure of highly skilled professionals—all of which have been reported by previous Zionist studies.

These indicators confirm that the costs of Israel’s continued aggression and blockade on Gaza are rapidly multiplying. Yemen’s escalating retaliatory campaigns, combined with the resilience and resistance operations from Gaza, are systematically undermining every pillar of the Israeli occupation. The result is internal division, the unraveling of its image before the world, growing rifts with the West and the United States, and a countdown that threatens the very legitimacy of its existence—all while the reverberations continue toward the anticipated victory.

Translated by Almasirah English website