Lower Growth Expectations
The Gaza War has had a significant impact on Israel's economy. The Standard & Poors credit rating agency predicts that Israel's economy will only grow by 0.5% next year. This is a big drop from the previous expectation of 2.8% growth.
Current Year Growth
The agency also expects that Israel's economy will grow by 1.5% for the entire current year. This is lower than what the Bank of Israel predicted in October. The Bank of Israel had estimated a growth of 2.3% for this year, down from the previous expectation of 3%.
Optimistic Estimates
The Israeli Central Bank had estimated a growth of 2.8% for the year 2024. However, economists on the Tel Aviv Stock Exchange believe that this estimate is too optimistic.
Credit Outlook
If the conflict is resolved, Standard & Poors may change Israel's credit outlook from negative to stable. The agency is concerned about the decline in regional security and internal risks.
Contraction in GDP
Standard & Poors expects a 5% contraction in Israel's gross domestic product (GDP) in the fourth quarter of this year. This is due to a decline in all spending components, including domestic demand, exports, and imports. Commercial activity and consumer demand have also decreased, creating an uncertain investment environment.
Negative Repercussions
The call-up of reserve soldiers, the halt in foreign tourism, and the overall impact on confidence will further harm economic growth in the last three months of this year, according to Standard & Poors.
War's Impact
Last month, JPMorgan Chase predicted that the Israeli economy could contract by 11% in the last three months of this year due to the escalation of the war in Gaza.
Costs of the War
To cover the increasing costs of the war, Israel has collected about 30 billion shekels ($7.8 billion) since the start of the aggression on Gaza.
Human Toll
The war has taken a devastating toll on the people of Gaza. According to official Palestinian sources, there have been 11,240 casualties, including 4,630 children and 3,130 women. Additionally, 29,000 people have been injured.
Source: Al Jazeera, Anadolu, and various websites
