Israel GDP Growth Revised Down To 0.3% As Gaza War Hits Economy

Israel's economy grew more slowly in the second quarter than previously estimated, according to recent data released, as the ongoing war in Gaza against the Palestinian Islamist group Hamas continued to strain growth, Steven Scheer reported for Reuters.

In addition to a weakening economy, inflation has spiked, and central bank officials have warned of potential interest rate hikes.

Gross domestic product (GDP) rose by an annualized 0.3% in the April-June period, according to the Central Bureau of Statistics' third estimate, down from a 0.7% estimate reported last month and an initial 1.2% estimate published in August.

The economy was buoyed by gains in consumer and state spending as well as investment in fixed assets, but exports declined.

Last week, the Bank of Israel reduced its 2024 economic growth forecast to 0.5%, down from the previous estimate of 1.5%.

In addition to a weakening economy, inflation has spiked, and central bank officials have warned of potential interest rate hikes. The Bank of Israel held rates steady last week for the sixth consecutive policy meeting.

First-quarter GDP growth remained unchanged at 17.2%, reflecting the economy's recovery from a sharp contraction in the fourth quarter of 2023, when the war began.