The effects on these countries' economies far exceed those on the Israeli economy, according to the agency's report on Monday.

S&P released various scenarios, predicting a decline in Egypt's tourism revenues ranging from 10 to 30 percent, which could cost the country 4-11 percent of its foreign exchange reserves.

Lebanon also could experience a decline in its GDP of up to 10 percent due to the war.

However, S&P anticipated that Israel's real GDP would drop by 5 percent on a yearly basis in the fourth quarter of 2023, bringing down growth for the full year to 1.5 percent.

"While a halt in foreign tourism in Israel may have [minimal] impact on the country's economy, it could lead to significant problems in Egypt, Jordan, and Lebanon," S&P warned.

The agency, which has already put Israel’s AA- rating on a "negative outlook" and downgraded Egypt’s by one notch to B-, also mapped out various scenarios of a 10 percent, 30 percent, or 70 percent loss in tourism receipts in each country.

In 2022, tourism contributed around 12 percent to Egypt's current account receipts and 26 percent to Lebanon, as stated by the rating agency.

"A prolonged conflict may lead to a significant loss of GDP and foreign exchange receipts across MENA region," S&P highlighted.

Travellers are cancelling or postponing planned vacations to the Middle East and North Africa due to fears of escalating the Israeli war on Gaza, and touring companies have also altered itineraries and cancelled flights.

Leisure travel demand to the neighbouring countries was hit after the outbreak of the war, and escalation would have a devastating impact on tourism in the region, as Reuters reported.

Major airlines not only extended the temporary suspension of flights to Israel until the end of 2023 but also changed flight routes to avoid neighbouring countries as well.

They also witnessed a sharp increase in cancellations and a slowdown in bookings to the region, primarily in short-term reservations, according to Reuters.

Egypt's tourism sector
 

In FY2022/23, Egypt's tourism revenue hit a record high of $13.6 billion up by 26.8 percent from $10.7 billion in FY2021/2022, according to the data released by the Central Bank of Egypt (CBE).

This surge in tourism revenue helped Egypt transform a $10.5 billion deficit in its balance of payments in FY2021/2022 into a surplus of $882 million in FY2022/2023.

Recognizing the pivotal role of tourism in bolstering foreign currency revenue, Egypt aims to attract 30 million tourists annually by 2028, doubling the current figure of 15 million.