IDF vehicle in Kiryat Shmona
IDF vehicle in Kiryat ShmonaEyal Margolen/Flash 90

Businesses in the northern communities of Kiryat Shmona and Shlomi have been the hardest-hit in the economic fallout from the war with Hamas and continued attacks by the Hezbollah terrorist organization, according to data from Sheba Automated Banking Services, which develops and manages the national credit card payment system.

According to the Sheba organization, there has been a 75% decrease in expenditures from businesses based in Kiryat Shmona and Shlomi in the 15 weeks since the beginning of the war, compared to 60% for the southern city of Sderot, which has begun to recover economically from the October 7 massacre and subsequent evacuation of the city.

Cities whose economies are based on domestic tourism, such as Tiberias and Eilat, continue to suffer significant economic damage and continue to see a decrease of 20% and 32% (respectively) in spending on credit cards in the city compared to the average figure before the war.

Meanwhile, with the intensity of the fighting in Gaza decreasing, the return of many IDF reservists to their jobs, and the resumption of classes for many college students, the cities of Tel Aviv and Jerusalem have seen their economies bounce back in the month of January.

Tali Hollenberg, VP of Marketing at Sheba, said that "the expenditure figures by geographic area give a clearer indication of the impact of the war on the Israeli economy and where aid should be directed to businesses and Israelis who are still far from returning to normal."

"Eilat and Tiberias, two cities [whose economies are] based on Israeli domestic tourism and foreign tourism, have been affected since the beginning of the war by way of a sharp decrease in the amount of spending there, and even in the 16th week they are still far from recovery. We have seen in recent weeks that there is a close connection between the intensity of the war and spending, and therefore the decrease in expenditures in the northern cities, Kiryat Shmona and Shlomi, are higher than in the city of Sderot and in the areas adjacent to it, where there is already a partial return of residents to the communities.

"In addition, the release of the reserves and their return to the workplaces has a positive effect on the economy and accelerates the return to normalcy, and thus in cities like Tel Aviv and Jerusalem, which have both a significant workforce and a large volume of students, we see that the expenditure figures are similar to the pre-war averages.

"Another positive point is that in most of the cities of the center, the volumes of activity recorded in the weeks from the beginning of January 2024 are higher than the average they had before the war," she said.