2024-02-19 18:25:58
Israelis sharply curtailed spending, travel and investment late last year as Israel’s military offensive against the Palestinian group Hamas in Gaza dealt a heavy blow to the country’s economy, according to preliminary data released today and cited by Reuters.
Israel’s gross domestic product (GDP), estimated at roughly $500 billion, shrank by as much as 19.4 percent year-on-year in the October-December 2023 quarter, the country’s Central Bureau of Statistics said.
Economists polled by Reuters had expected the Israeli economy to contract at nearly half the rate.
Still, the country’s economy grew by 2 percent in 2023 compared to 2022, when it also grew by 6.5 percent on an annual basis.
“The contraction of the economy in the fourth quarter was directly affected by the outbreak of the war with Hamas on October 7,” the Israeli statistics said.
Before Hamas’ attack on southern Israel on October 7, Israel’s economy was on track to achieve growth of about 3.5 percent in 2023.
Depending on the length of the war in Gaza and whether it spreads to other fronts, Israel’s economy is expected to grow by 2 percent in 2024.
Israel’s central bank expects a sharp economic recovery in 2025, given expectations that Israel’s economy is broadly stable, driven by the high-tech sector.
At the same time, inflation in Israel fell to its lowest level in more than two years, to 2.6 percent in January. BTA reported.
In the fourth quarter, the country’s economy was affected by a 26.9 percent drop in consumer spending. Exports fell by 18.3 percent and investment in fixed assets collapsed by 67.8 percent, mostly in housing construction.
Government spending, mainly on military spending and compensating affected businesses and households, however, jumped by 88.1 percent.