Israel faces $12 billion in losses after 12-day war with Iran
Israel Faces Whopping Damages After Iran War; Israel has suffered an estimated $12 billion in direct losses from its 12-day war with Iran, with total costs potentially rising to $20 billion.
June 30, 2025
Israel has incurred an estimated $12 billion in direct losses from its 12-day war with Iran, according to Israeli media and economic reports released on Wednesday.
The figures include military spending, damages from missile strikes, compensation to individuals and businesses, and reconstruction costs.
Analysts expect the total could rise to $20 billion once indirect damages and civilian compensation are fully assessed.
According to Hebrew news site Yedioth Ahronoth, the Israeli treasury has already absorbed losses amounting to 22 billion shekels (approx. $6.46bn).
Meanwhile, the Israeli military has requested an additional 40 billion shekels ($11.7 billion) in funding to replenish its weapon stockpiles, acquire more interceptors and offensive munitions, and sustain reserve forces after earlier requests for 10 and then 30 billion shekels before the war began.
These figures do not account for ongoing expenses such as temporary hotel accommodations and alternative housing for evacuated residents, nor the yet-to-be-finalised damages to approximately a third of the affected properties.
Rehabilitating those properties could add another 1 to 1.5 billion shekels (between $294m and $440m).
To cover the war’s cost, Israel is expected to increase its national budget deficit, which has already risen during the war on Gaza, to around six percent.
This comes alongside a projected economic growth decline of at least 0.2 percent, which would lower tax revenue intake.
Reported losses are spread across several categories
10bn shekels ($2.9bn) in military spending, including munitions, aerial operations, and logistics for reserve units
5bn shekels ($1.5bn) in compensation for businesses, workers, and 15,000 displaced residents
5bn shekels ($1.5bn) for damages to buildings and infrastructure by Iranian missile strikes
Calls for US support
An Israeli finance ministry source told Yedioth Ahronoth that Israel may seek additional financial support from the United States, either through direct aid or loan guarantees, to help offset the costs of the war and address urgent defense needs.
Adam Bloomberg, deputy economic director of Israel's Histadrut labour federation, told Israeli news site Maariv that the economic shutdown triggered by the war cost the Israeli economy about 1.5 billion shekels ($294 million) per day, which meant businesses had lost over $3.5 billion during the 12-day conflict.
Economist Yehuda Sharoni, citing a Reichman University report published on Walla, estimated that a one-month war would cost Israel 40 billion shekels ($11.76 billion).
Property damage in Israel's interior, including homes, cars, and personal belongings, is currently estimated at three billion shekels (around $810 million).
This does not include indirect losses such as company compensation (around five billion shekels) and hits to the country’s GDP.
Massive military spending
Israeli business daily Calcalist reported that the government had spent roughly $5 billion, around $725 million per day, on offensive operations against Iran and defensive measures to intercept Tehran’s missiles and drones.
Compensation alone is expected to cost at least five billion shekels ($1.5 billion).
Markets now expect the government’s fiscal deficit to exceed six percent of GDP this year, surpassing the 4.9 percent cap set by the finance ministry.
The Marker reported on Monday that direct damages from Iran's missile strikes had already exceeded five billion shekels ($1.5 billion).
Israel also spent billions more attempting to defend against the large-scale barrage of missiles and drones launched by Iran.
These attacks disrupted energy and fuel supplies across Israel and caused a major hit to the country’s capital markets, including a direct strike on the Tel Aviv Stock Exchange building.
Some economists warned that had the war continued, Israel may have faced full-scale economic collapse.
According to Financial Express, Israel spent around $5 billion in the first week of attacks on Iran, with $593 million spent on offensive strikes and $132 million on defence and military mobilisation each day.
The Wall Street Journal reported that Israel's missile defense systems alone cost between $10 million and $200 million per day to operate.
Nasser Abdel Karim, a finance professor at the American University in Palestine, told Anadolu that the war affected not only Israel's military budget but also its overall production capacity.
He estimated total direct and indirect war-related losses could reach $20 billion.
Deepening fiscal strain
Abdel Karim also said Israel's budget deficit could rise to six percent, with compensation payments further straining public finances.
Over 10,000 people were evacuated in the war’s first week, and over 36,000 individuals have submitted compensation claims, according to Israel’s Tax Authority.
He warned that the government may resort to one or more measures to cover the deficit, including cutting public spending on health and education, raising taxes, or increasing borrowing, which could push the debt-to-GDP ratio beyond 75 percent.
Iran's strikes targeted critical infrastructure in Tel Aviv and Haifa, including an attack that shut down the Bazan oil refinery, Israel's largest, resulting in estimated daily losses of $3 million, according to the Financial Times.
Economic disruption across sectors
Ben Gurion Airport also suspended operations in response to Iran's retaliatory strikes. The country's largest airport usually handles around 300 flights and 35,000 passengers daily.
As of Sunday, it had only partially reopened to facilitate evacuations, with the disruption expected to deepen economic losses.
Meanwhile, Israel’s national carrier, El Al, suspended flights and rerouted aircraft to avoid potential threats, reportedly incurring $6 million in losses.
Financial markets suffered amid the military escalation.
One Iranian missile reportedly struck Israel’s diamond exchange, a sector accounting for about eight percent of the country's total exports.
The strike triggered panic among investors, resulting in mass selloffs and further destabilizing the market.
Losses at the Weizmann Institute of Science alone are estimated at 2 billion shekels (around $540 million), in addition to damages sustained at the Bazan oil refinery in Haifa.
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