The Israeli enemy’s economy is suffering huge losses as a result of the aggression against Gaza and the Yemeni naval operations

Posted on February 28, 2024
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The Central Bank of the Israeli entity kept interest rates unchanged, at the level of 4.5%, due to the expected uncertainty regarding the Yemeni military operations and the aggression against the Gaza Strip that has continued since last October 7.

During a press conference, the governor of the Bank of Israeli entity, Amir Yaron, said that the past four months were difficult for the Israeli entity, because the war brought with it noticeable security and economic repercussions, affecting economic activity in general and financial markets according to what was reported by the Hebrew Jerusalem Post newspaper .

Yaron added that one of the factors that led to maintaine the interest rate was the increase in spending in the budget to finance the war, which represents a threat to the continued moderation of inflation, which fell to a rate of 2.6% in January, within a target rate between 1% to 3%.

The newspaper reported that before the interest rate cut last January, the “Bank of Israel” raised the interest rate 10 consecutive times in a strong tightening cycle from the lowest level ever at 0.1% in April 2022.

The Israeli economy contracted by 19.4% annually in the last quarter of last year 2023, reflecting the losses of the war, ending 2023 with growth of 2%.

Yaron expressed his concern that the construction sector would be affected by the shortage of workers, after Palestinian workers were prevented from working inside the occupied Palestinian territories 1948.

He added: To enhance the confidence of markets and rating companies in the Israeli economy, it is important for the “government” and the “Knesset” to move to deal with the existing economic issues, which requires structural changes in the ministries and giving priority to growth engines.

Earlier, Hebrew reports reported that the credit rating company “Fitch” intends to reduce the Israeli enemy’s credit rating from A1 to A2.

This reduction, if it actually took place, comes two weeks after the credit rating agency Moody’s decision to lower the Israeli credit rating.

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