The continuation of the current situation, escalation on the northern front, or an agreement that includes a deal for releasing the hostages: How will each of these scenarios affect Israel’s economy? This paper examines three scenarios: the continuation of the current situation, escalation on the northern front, and an agreement based on the proposed deal for the release of the hostages and cessation of fighting in Gaza. Among the conclusions of the comparative analysis of the scenarios is that Israel is expected to suffer long-term economic damage regardless of the outcome. The anticipated decline in growth rates in all scenarios compared to pre-war economic forecasts and the increase in defense expenditures could exacerbate the risk of a recession reminiscent of the lost decade following the Yom Kippur War.