Israeli economy shrinks in Q4 amid conflict with Hamas


(MENAFN) Preliminary estimates from the Israeli Central Bureau of Statistics reveal a significant contraction of 19.4 percent in Israel's economy on an annual basis during the fourth quarter of last year. The decline is attributed to the damaging impact of the conflict with Hamas in the Gaza Strip, which disrupted economic activity and hindered growth prospects.

The war with Hamas resulted in widespread disruptions, particularly as a result of the mobilization of a large number of reserve soldiers and the displacement of tens of thousands of residents from border towns near Gaza and Lebanon. Continuous missile attacks from Hamas and Hezbollah further exacerbated the economic strain, leading to a sharp decline in economic output.

Despite an initial trajectory of growth, with the economy expanding by 2 percent for the entirety of 2023 compared to 6.5 percent in 2022, the outbreak of conflict in October severely derailed economic progress. Prior to the onset of hostilities, the Israeli economy was on course to achieve an overall growth rate of approximately 3.5 percent for 2023.

Looking ahead, the Israeli economy is projected to experience modest growth of around 2.0 percent in 2024. However, this forecast is contingent upon several factors, including the duration of the ongoing conflict and the potential for its escalation on other fronts. The economic outlook remains uncertain as Israel navigates through the complexities and challenges posed by regional conflicts and security threats.

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