Israel barely has eight million citizens. For nearly seven days, it is created a defensive strategy based on short, sharp wars, as it’s army is dependent on the manpower of reservists. So, how can it continue to support a war with Hamas that has been continuing for over a month?

The truth is that economic growth was already slowing down in the first half of 2014. The second quarter revealed GDP rising by only 1.7%, barely in line with population change. Import and export figures are also pointing towards a reduction of economic activity. Clients of mine in Jerusalem have been disclosing lower sales since the winter.

And then the war comes along. How will this impact on the economy?

“Israel’s central bank made comments to the effect that 0.5% may be shaved off the economic growth forecast for the year.” I read of an estimate that a billion or two shekels (say US$0.35 – 0.7b) could be lost in revenues to the government. Businesses in the south of the country near Gaza have reported a 40% downturn in activity. Maybe most importantly but lost amongst the number crunching, reservists will not be able to run, operate and service their own small enterprises.

So can we expect a further knock on the GDP figures? In the short term, absolutely. There again, many analysts have recalled that after previous such military operations in Gaza and in Lebanon over the past 15 years, the economy rebounded back very quickly and into much stronger positions. It is certainly fair to say for now that the economy has demonstrated resilience. Note that foreign direct investment from the likes of GoDaddy continues to turn up.

There is much empirical evidence why Israel’s economy is likely to be a key position for global investors after the guns have ceased shouting at Hamas leaders. “Many of Israel’s most amazing contributions to the world – from the DiskOnKey to the PillCam –result from its existential need for innovation in the military.”

And this conflict is no different. For example, until July 2014, the Iron Dome system against short range rockets had not sold one unit overseas. The interest has been so great in the past month that visiting defense officials have literally been able to watch it function in real-time. And consider the start-up eVigilio, whose 35 workers have developed an application that can warn entire populations about incoming threats within seconds. This can apply to Kassam missiles in Israel, as well as earthquakes in California or erupting volcanos in Iceland.