An Israeli national flag over products for sale at the Carmel market in Tel Aviv, Israel, on November 7, 2023.
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According to official figures, Israel’s gross domestic product contracted by almost 20% in the fourth quarter of 2023.
The decline was significantly larger than expected, with analysts predicting a decline of about 10%. It reflects the toll of the country’s war against Hamas in Gaza, now entering its fifth month.
Economic data released Monday “primarily pointed to a decline in private consumption and a sharp decline in investment, particularly in real estate,” analysts at Goldman Sachs wrote in a research note.
“The sharp decline in GDP occurred despite a strong increase in public consumption and a positive net trade contribution, with the decline in imports outpacing the decline in exports.”
Official figures showed an annualized 26.9% quarter-on-quarter decline in private consumption and a nearly 68% decline in fixed investment as housing construction slowed due to a shortage of both Israeli labor due to military mobilization and Palestinian labor, As was the case with the latter group, they have largely been banned from entering Israel since October 7th.
Previously, more than 150,000 Palestinian workers from the occupied West Bank entered Israel every day to work in various sectors, primarily construction and agriculture.
The decline in Israel’s GDP “was much worse than expected and highlights the extent of the impact of the Hamas attacks and the war in Gaza,” said Liam Peach, senior emerging markets economist at Capital Economics in London, in an analysis note.
“While a recovery is expected to begin in the first quarter, GDP growth throughout 2024 is now expected to be at one of its weakest rates on record.”
Israel’s high-tech economy has been particularly hurt by the fact that it has mobilized 300,000 of its men and women as military reservists for deployment in the Gaza Strip and on Lebanon’s northern border with Hezbollah.
The mobilization was triggered by the October 7 terrorist attack led by the militant Palestinian group Hamas, which killed around 1,200 people in Israel. According to the Hamas-run Ministry of Health in the Gaza Strip, Israel’s subsequent offensive against the Gaza Strip and relentless bombings have killed more than 28,000 people in the blockaded territory.
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2024-02-20 19:35:07
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