Israel Economy Slumps From Hamas War With Far Worse Drop Than Forecast - Bloomberg
▻https://www.bloomberg.com/news/articles/2024-02-19/israel-economy-slumps-from-war-with-far-worse-drop-than-forecast
Israel’s economy suffered one of its worst-ever slumps, after the Hamas war paralyzed businesses, forced people to evacuate their homes and caused the military to call up hundreds of thousands of reservists.
Gross domestic product shrank an annualized 19.4% in the final three months of last year, in seasonally-adjusted terms, according to preliminary figures released on Monday. That was worse than every estimate in a Bloomberg survey of analysts, whose median forecast was for a decline of 10.5%.
The shekel weakened slightly on the news and was trading 0.4% down at 3.62 per dollar at 3:53 p.m. in Tel Aviv, heading for its first drop in four days. Stocks initially pared advances.
“The release highlights the degree to which the Israeli economy has been affected by the conflict, particularly on the private activity side,” Goldman Sachs Group Inc. economists Tadas Gedminas and Kevin Daly said in a report.
Though the war broke the economy’s momentum toward the end of 2023, GDP still expanded 2% in the full year, matching the projection by the central bank’s research department. The Bank of Israel’s growth estimate for 2024 is the same at 2%, while the Finance Ministry sees it at 1.6%.
The assessment is the first official tally of the war’s toll on GDP and captures the extent of the disruption that tore through the $520 billion economy in the aftermath of Hamas’s attacks on Oct. 7. Alongside the call-up of reservists that depleted roughly 8% of the workforce, it led to restrictions comparable to shutdowns imposed during the Covid-19 pandemic, causing a sudden crash in manufacturing, jolting consumption and briefly emptying schools, offices and construction sites.