- ORIGINAL NEWS
Israel’s GDP contracts nearly 20% in fourth quarter amid Gaza war
- SUMMARY
Israel’s economy has recently faced a significant decline.
Specifically, the country’s gross domestic product (GDP), which measures the value of all goods and services produced, fell by almost 20% in the last three months of 2023.
This unexpected downturn was much more severe than predicted, with analysts initially anticipating a contraction of only 10%.
The primary reason for this economic setback is the ongoing war between Israel and Hamas in Gaza, which began in October 2023.
This conflict has led to the mobilization of military reservists, who make up 300,000 people, both men and women.
This mobilization has reduced the workforce in Israel, particularly in the construction sector, resulting in a reduction in investments and a scarcity of workers.
Furthermore, Palestinian workers from the West Bank have been restricted from entering Israel, further straining the labor market.
The data also indicates a significant decrease in private consumption by households, indicating a disruption in consumer spending.
Private investment has also taken a deep hit, especially in real estate, as the shortage of workers has halted residential construction.
Experts are expecting a slow recovery in the first quarter of 2024.
However, the overall economic growth for the entire year is projected to be sluggish, likely falling within a weak historical range.
The high-tech sector, which is vital to the Israeli economy, has been particularly impacted by the conflict due to the mobilization of reservists.
- NEWS SENTIMENT CHECK
- Overall sentiment:
negative
Positive
“”The deep GDP contraction occurred despite a strong surge in public sector consumption as well as a positive net trade contribution, with the decline in imports outpacing the decline in exports.””
Negative
“Israel’s gross domestic product shrank nearly 20% in the fourth quarter of 2023, according to official figures.”
“The contraction was significantly larger than expected, as analysts predicted a contraction of around 10%.”
“Fixed investment plummeting nearly 68% as residential construction ground to a halt amid a shortage of both Israel workers due to military mobilization and Palestinian workers as the latter group has been mostly barred from entering Israel since Oct. 7.”
“Israel’s GDP contraction “was much worse than had been expected and highlights the extent of the hit from the Hamas attacks and the war in Gaza,” Liam Peach, senior emerging markets economist at London-based Capital Economics, said in an analysis note.”