Israel’s output contracted sharply in the final three months of 2023, falling for the first time in nearly two years, as the war with Hamas takes a heavy toll on the economy, a media report said.
The country’s Gross Domestic Product (GDP) plunged 19.4 per cent on an annualised basis compared to the July-to-September quarter when it grew 1.8 per cent, Israel’s Central Bureau of Statistics said on Monday in its initial estimate.
The contraction is the latest piece of bad economic news for Israel, which has been waging a war in Gaza aimed at destroying Hamas after the latter’s attack on the country in October.
The worse-than-expected decline was driven by a 26.9 per cent drop in private consumption, a 67.8 per cent decrease in fixed investment by businesses, and an 18.3 per cent decline in exports.
The conflict is expected to cost Israel around 255 billion shekels ($70.3 billion) by 2025 and has led to the country’s first-ever credit rating downgrade by Moody’s earlier this month.
Despite some indicators pointing to a swift rebound, GDP growth in 2024 is likely to be one of the weakest on record, according to experts.
The central bank had previously cut its forecast for GDP growth in 2024 to 2 per cent from an earlier estimate on the eve of the war, citing elevated political risk and deteriorating public finances.
Israel’s economy, despite managing the fallout from the conflict reasonably well, faces significant challenges ahead as the war with Hamas continues to take its toll.
