Israel’s economy has taken a significant hit, recording a 20% drop in GDP in the final quarter of 2023, marking the worst quarter since the onset of the COVID-19 pandemic in early 2020. The decline, as reported by official figures today, is largely attributed to the profound impact of the ongoing conflict in Gaza on the nation’s high-tech economy.
According to data from the Central Bureau of Statistics, Israel’s GDP contracted by 19.4% in the final quarter of 2023 compared to the preceding three months. This downturn has led to a shortfall in economic growth for the year, with GDP expanding by only 2.0% in 2023, falling short of the Bank of Israel’s projection of 2.3% made following the outbreak of the conflict in October.
The adverse effects of the conflict are evident across various sectors of the Israeli economy. Exports experienced a significant decline of 18.3%, while imports plummeted by 42.4%. These declines were exacerbated by disruptions in air travel and international shipping, as airlines ceased flights and shipping routes avoided the Red Sea due to security concerns stemming from Houthi rebel attacks on vessels amidst Israel’s conflict with Hamas.
The escalation of violence initiated by Hamas’s October 7 attack on southern Israel has resulted in devastating consequences for both sides. In Israel, approximately 1,160 individuals, mostly civilians, have lost their lives, according to an AFP tally of official figures. Meanwhile, the death toll in Gaza has surpassed 29,000, with the majority being women and children, as reported by the health ministry in the Hamas-controlled territory.
The economic repercussions of the conflict have been profound, with Israel grappling with labor shortages and the collapse of its tourism industry since the outbreak of hostilities. In response to the security crisis, the Israeli military mobilized over 300,000 reservists, while the government imposed restrictions on the entry of Palestinian laborers, numbering at least 160,000, who traditionally formed a significant portion of the construction and agriculture workforce.
As Israel contends with the economic fallout of the Gaza conflict, the nation faces significant challenges in rebuilding its economy and restoring stability in the region. The enduring impact of the conflict underscores the urgent need for diplomatic efforts to achieve a lasting resolution and alleviate the humanitarian crisis affecting both Israelis and Palestinians.
Sources By Agencies
