Since the war between Israel and Hamas started on October 7, Israel has seen its economy plummeted 20 percent, according to Israeli official figures released this Monday.
Times of Israel reported this Monday that according to new statistical data from Israel’s Central Bureau of Statistics, Israel’s Gross Domestic Product (GDP) saw an unprecedented decrease by nearly 20 percent in the final months of 2023. This is the first official assessment showing the Gaza war’s toll on the Israeli GDP.
“The Israeli economy shrank at a 19.4 percent annual rate in the fourth quarter of last year, data from Israel’s Central Bureau of Statistics, released on 19 February, shows,” the report noted, adding that the decline “marks the deepest three-month tumble since the second quarter of 2020, when the economy plunged almost 30% as the coronavirus pandemic-related lockdowns hurt consumer spending and left many businesses closed.” The 19.4 percent decrease is nearly 10 percent lower than what the Bloomberg median forecast reported before the October 7 war between Israel and Hamas.
As the report further said, the volume of import of goods for the whole 2023 fell by nearly 7 percent. This is while a year before in 2022, the number grew 12 percent. For Israel’s exports of goods in 2023, the number fell 1.1 percent despite the 8.6 percent increase in 2022.
Reasons for Israel’s historical economic downfall
It is as clear as crystal that the war with has contributed as the main reason for Israel’s historical and unprecedented economic downfall by the end of 2023.
First of all, it was because of the massive call-up of reservist troops at the start of the war that resulted in an eight percent depletion of the Israeli workforce simply because the reservists were doing jobs before October 7 that contributed to Israel’s economy.
To read between the lines, a report by the Central Bank of Israel in November revealed that the cost of the reserve call-up amounted to $630 million per week for Israel’s economy. This is while Israel is already grappling with significant levels of unemployment. In other words, figures say that more than 260,000 Israelis have applied for unemployment benefits since the onset of the war.
Confirming the economic hardship in Israel, the Israeli public broadcaster KAN reported back in December that there are about two million Israelis living below the poverty line.
“Around two million Israelis currently live in poverty, among them 870,000 children, according to official figures. The poverty rate among the Arab population and ultra-Orthodox Jews remained unchanged at around 39 percent and the poverty line in 2023 sat at 3,100 shekels ($835) for individuals, up from 2,900 shekels ($781) in 2022,” the report said.
It also added that “Israel’s poverty rates are among the highest compared to developed countries, particularly among children.”
Israel’s growing debt as a result of increasing expenditures in the Gaza war also contributed to the declining economy in Israel. In this regard, the Financial Times reported early this January that Israel amassed billions of dollars in debt in the first weeks of the war.
“The risks for Israel have never been higher. Tel Aviv’s settler-colonial economy, reliant on the subjugation of Palestinians, may be facing a precarious future, possibly marking the next domino to fall in this unfolding scenario,” a report by The Cradle also wrote in last November.
