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Israel lowers estimates for 2nd quarter’s GDP growth to 0.7 percent
(MENAFN) On Monday, Israel revised its growth forecast for the country’s gross domestic product (GDP) for the second quarter of the year, reducing the estimate from 1.2 percent to 0.7 percent. This adjustment reflects the ongoing economic pressures related to the costly conflict with Gaza. According to the state statistics bureau, the GDP grew by just 0.7 percent annually in the April-June period, a notable decrease from the earlier projection.
The report highlighted that the contraction in the private sector, which shrank by 2.7 percent, was partially offset by a significant increase in government spending, which surged by 8.2 percent. Despite this, the overall economic activity remains under strain. Additionally, Israel’s unemployment rate held steady at 2.6 percent as of August, indicating a tight labor market amid these challenging conditions.
The statistics also revealed a decline in Israel’s export and import activities. Goods and services exports, excluding diamonds, fell by 8.4 percent in the second quarter of the year, while imports, excluding diamonds and weapons, decreased by 9.3 percent. These figures point to a broader contraction in trade.
The budget deficit continues to grow, influenced heavily by the ongoing conflict in Gaza. As of August, the deficit as a percentage of GDP reached 8.3 percent, an increase from previous months (7.6 percent in June, 6.2 percent in March, and 4.1 percent last December). The deficit for August alone amounted to 12.1 billion shekels, or approximately USD3.22 billion. The extended military operations, which began following a Hamas attack last October and have resulted in significant casualties, are straining the Israeli economy and driving up government expenditures.
The report highlighted that the contraction in the private sector, which shrank by 2.7 percent, was partially offset by a significant increase in government spending, which surged by 8.2 percent. Despite this, the overall economic activity remains under strain. Additionally, Israel’s unemployment rate held steady at 2.6 percent as of August, indicating a tight labor market amid these challenging conditions.
The statistics also revealed a decline in Israel’s export and import activities. Goods and services exports, excluding diamonds, fell by 8.4 percent in the second quarter of the year, while imports, excluding diamonds and weapons, decreased by 9.3 percent. These figures point to a broader contraction in trade.
The budget deficit continues to grow, influenced heavily by the ongoing conflict in Gaza. As of August, the deficit as a percentage of GDP reached 8.3 percent, an increase from previous months (7.6 percent in June, 6.2 percent in March, and 4.1 percent last December). The deficit for August alone amounted to 12.1 billion shekels, or approximately USD3.22 billion. The extended military operations, which began following a Hamas attack last October and have resulted in significant casualties, are straining the Israeli economy and driving up government expenditures.
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