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Israel economy shrank by almost 20% in the last quarter of 2023 due to Gaza war

February 20, 2024 at 9:33 pm

Israeli shekels. [Christopher Furlong/Getty Images]

Israel’s economy shrank by almost 20 per cent in the last quarter of 2023, amid Israeli forces’ ongoing offensive and bombardment of the Gaza Strip.

According to Israel’s Central Bureau of Statistics, preliminary figures showed that the country’s gross domestic product (GDP) contracted by an annualised 19.4 per cent in the final three months of last year, which was almost double the market expectation of the decrease.

In the first quarter of 2023, the GDP growth rate was 3.1 per cent, which decreased to 2.8 per cent in the second quarter, followed by 2.7 per cent in the third quarter. For the entirety of 2023, the Israeli economy grew a total of only 2 per cent, which was a significant decrease from 6.5 per cent in 2022.

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“The contraction of the economy in the fourth quarter of 2023 was directly affected by the outbreak of the Iron Swords War on 7 October, the Statistics Bureau stated, referring to Tel Aviv’s launch of its bombardment and invasion of Gaza following an operation into Israeli-held territory by Palestinian Resistance group, Hamas.

Reasons for the shrinking of the Israeli economy likely vary from the boycotting of Israeli products worldwide, to the slowdown of international investment into the country, to the decrease in imports to and exports from the Occupation State due to the disruption of shipping lanes.

All of those reasons have reportedly led to falling demand, rising costs, and labour shortages within the country, with Israel’s war on Gaza also predicted to cost the Occupation State $48 billion.

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