Israel cuts annual growth forecasts due to war

Jerusalem, Nov 24

The Israeli Finance Ministry has substantially reduced its annual economic growth forecasts due to the war with Hamas, according to a new report.

The report issued by the Ministry on Thursday stated that the current conflict's impact on the Israeli economy goes beyond any security incident that the country has experienced during the last two decades or more, reports Xinhua news agency.

After a growth of 6.5 per cent recorded in 2022, the report predicts a growth of 2 per cent for the current year, down from the 2.7 per cent forecast in the previous report issued in June.

It noted that prior to the conflict, the Ministry would have revised the 2023 forecast to 3.4 per cent, and the conflict alone has an impact of 1.4 percentage points.

Accordingly, the growth per capita forecast for 2023, which stood at 0.8 per cent in June, was reduced to 0.1 per cent in the current report.

Due to the high uncertainty that marks the conflict, the report presented three scenarios regarding the growth forecast for 2024, ranging from 0.2 to 2.2 per cent, depending on the duration and intensity of the fighting.

All three possible 2024 growth figures are lower than the previous forecast of 3.1 per cent.

The report also predicts an increase of only 0.1 percent in private consumption in 2023, compared to 3.1 per cent in the previous forecast, as the sense of security and household incomes are harmed.

Israeli exports and imports are expected to decrease by 0.6 per cent and 4.3 per cent respectively in 2023, mainly due to a decline in goods exports and a decline in local demand.