According to official statistics, Israel’s economy contracted significantly more than anticipated following the battle with Hamas in Gaza.
In the fourth quarter of 2023, the GDP, a crucial indicator of a nation’s economic health, decreased by 19% on an annualized basis.
That translates to a 5% decrease from October to December. The Central Bureau of Statistics stated that the conflict’s start on October 7th “directly affected” GDP.
Since terrorists from the Palestinian organization conducted the worst attack on Israel in its history from Gaza, Israel and Hamas have been at war.
Approximately 1,200 individuals perished in the assault. More than 250 men, women, and children were taken prisoner by Hamas, a group that is banned by the US, Israel, the EU, and the UK.
Following this, an Israeli military operation has killed 29,000 Palestinians, according to the health ministry there, which is managed by Hamas.
The Central Bureau of Statistics in Israel presented numbers on Monday that surprised experts greatly.
In a Bloomberg survey of analysts, a 10.5% annualized fall was the median estimate.
By year’s end, the war had drastically reduced investment, tourism, and spending, according to the Central Bureau of Statistics.
It stated that there had been a decline of 67.8% in investments in fixed assets, particularly in residential construction, and a decline of 26.3% in private spending and 18.3% in exports. Due to a decrease in Palestinian laborers and military call-ups, the construction industry experienced a labor shortage.
In the meantime, government spending increased by 88.1%, mostly for war-related costs and compensation for people and companies.
Israel’s economy rose by 2% in the entire year, despite a significant decline in GDP between October and December.
But before to the assaults on October 7, it was predicted to grow by 3.5%.
Israel’s GDP shrank “much worse than had been expected and highlights the extent of the hit from the Hamas attacks and the war in Gaza,” according to Capital Economics emerging markets economist Liam Peach.
The growth prediction for the nation in 2024, he said, “now looks likely to post one of its weakest rates on record.”
Trade has been impacted by the violence elsewhere. Iran-sponsored Houthi militants have been pursuing cargo ships in the Red Sea that are en route to the Suez Canal.
According to President Abdel Fattah al-Sisi of Egypt, the attacks have reduced Suez Canal earnings by 40% to 50% so far this year.
With about 15% of all seaborne traffic passing through it, the Red Sea is one of the most significant freight routes in the world.
From bases in Yemen, the Houthis have been attacking ships they allege are either owned, operated, or flagged by Israel, or are making their way to Israeli ports. The owners and operators of these vessels, however, assert that they have no connection whatsoever to Israel.
In turn, the US and the UK have attacked Houthi targets in Yemen in retaliation.
However, a few of the biggest shipping corporations in the world have already banned their ships from crossing the strait before this.
