Israeli War-battered Economy Sees Double-digit Contraction, Sharpest Since Coronavirus Crisis

Israeli economy recorded a double-digit contraction in the three final months of 2023, with the ongoing war on Gaza taking a heavy toll on consumer spending, trade and investment, Israeli media reported, citing preliminary data by the Central Bureau of Statistics.

The Zionist entity’s economy shrank at a 19.4 percent annual rate in the fourth quarter of 2023.

It marks the deepest decline since the second quarter of 2020 when the economy dipped almost 30% as the coronavirus pandemic-related lockdowns hurt consumer spending and left many businesses closed, The Times of Israel reported.

The double-digit contraction that hit the economy during the war quarter compared with an expansion of 2.7% in the third quarter of 2023. Private consumption in the October to December period of 2023 plunged 26.9% and import of goods and services was down 42.4%.

Preliminary data from the Central Bureau of Statistics showed the Israeli economy expanded 2% in 2023 after growing at a fast pace of 6.5% in 2022. Private consumption decreased by 0.7% in 2023 after a 7.4% increase in 2022.

The import of goods and services fell in 2023 by 6.9%, after growing 12% in 2022. Exports of goods and services fell 1.1% in 2023 versus an increase of 8.6 in the year earlier.

The economic fallout from the war and expected downturn in private consumption and demand, and investment in sectors such as construction, prompted the Israeli Finance Ministry, the Bank of Israel, and global credit rating agencies to cut their growth prospects for 2023 in recent weeks, as the fighting is estimated to cost the economy as much as NIS 255 billion, the report added.

The Zionist entity’s ongoing discriminatory attacks on Gaza have been costing billions of dollars to the Israeli economy, as Tel Aviv suffers from falling demand, rising costs and labor shortages.

The cost of the call up of reserve troops, as well as lower employee productivity in some sectors, amounts to $630 million per week, according to a report published by the Bank of Israel in November.

It said the economic cost does not reflect the costs of reduced demand, shortages of Palestinian and foreign workers, and other items.

Source: Israeli media