Tourists from Belgium and France walk near tanks at a staging area outside the northern Gaza Strip. (REUTERS/Amir Cohen)
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Israel's war on the Gaza Strip is expected to cost it billions of dollars, temporarily hurt economic growth and put pressure on the government's finances. Analysts and officials compare the current operation to Israel's one-month war on Lebanon in the summer of 2006, as well as to conflicts in Gaza in 2009 and 2012, when the economy took a hit but bounced back quickly, except for tourism.The Bank of Israel cut its benchmark interest rate to 0.5 percent Monday from 0.75 percent, partly to offset economic damage from the conflict.Israel's mass daily Yedioth Ahronoth newspaper estimated the operation has so far cost 12 billion shekels, or 1.2 percent of total economic output.Should the war end in the next week or so, the damage would be 0.25 percentage point shaved off growth this year, according to Ori Greenfeld, chief economist at the Psagot brokerage, who believes 2014 growth could be as low as 2.5 percent.Israel's Manufacturers' Association estimates economic damage to factories at 820 million shekels so far, partly due to workers staying home or being among the more than 40,000 reserve soldiers called up due to the Gaza conflict.
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