Israel’s Central Bank Lowers Economic Growth Forecast Due to Israeli-Palestinian Conflict and Gaza Operation
Israel’s Central Bank Lowers Economic Growth Expectations Due to Conflict
Israel’s central bank has revised its predictions for the country’s economic performance this year as a result of the ongoing Israeli-Palestinian conflict and the military operation in the Gaza Strip.
Revised Economic Growth Forecast
In its recent economic report, Israel’s central bank announced a lowered expectation for the country’s economic growth in 2023. Initially, a 3% growth was projected in July, but it has now been revised to 2.3%.
Estimated Losses from the Conflict
The central bank estimates that the ongoing conflict will result in losses of approximately 0.5-1% of Israel’s overall output. It is important to note that these forecasts assume the conflict will not continue into the fourth quarter of 2023.
The report states, “We estimate that the war will reduce GDP growth by 0.5-1% in 2023 and 2024.”
Impacts on the Economy
In addition to the conflict, Israel’s central bank anticipates negative effects on the economy from reduced consumption, labor shortages due to mobilization and closure of educational institutions, as well as damage to capital in war zones and vulnerable areas.
Increased Budget Deficit and Public Debt Levels
The central bank has also raised its estimates for the budget deficit and public debt levels. The budget deficit for this year has increased to 2.3% from 1.3% of the gross domestic product. Additionally, the level of public debt now stands at 62% of the GDP.
Economic Losses from the Conflict
Bank Hapoalim, a leading Israeli bank, has calculated that the ongoing conflict with Hamas will cost the Israeli economy at least 27 billion shekels ($6.8 billion).