Big Changes in the Economy
According to JPMorgan Chase, an American bank, the Israeli economy is expected to shrink by 11% this year. That's a big deal! At first, experts thought the war wouldn't have a huge impact on the economy, but they were wrong. The bank had to change its predictions because the situation got worse.
What's Happening in Gaza?
Israel has started a big operation in Gaza, and their Prime Minister, Benjamin Netanyahu, says it's going to be a long and difficult campaign. This has caused a lot of uncertainty and made investors worried. As a result, the stock market in Tel Aviv has fallen by 11% since October 7, and the value of their currency, the shekel, has dropped too.
What Does the Future Look Like?
JPMorgan believes that Israel's economy will grow by 2.5% only this year and 2% in 2024. The 11% decline they're talking about is just for the last three months of this year compared to the previous quarter.
The Risks and Challenges
Experts say that the risks are increasing, and it's affecting the economy in a negative way. They also mentioned that it's hard to measure the impact of the war on the economy because there's a lot of uncertainty about how long it will last and how big it will get. They don't have all the data they need to make accurate predictions.
Comparing Past Wars
When experts looked at previous wars Israel has been involved in, they found that the effects of this current war will be much greater. In 2014, Israel had a war with Gaza that lasted 51 days, but it didn't have a big impact on their economy. The same goes for the 2006 war with Lebanon. However, this time it's different.
Other Important Details
Netanyahu's government has called up around 350,000 reserve soldiers, which is the largest number in Israel's history. The Central Bank of Israel has decided to keep the key interest rate the same to help their currency, the shekel. The Ministry of Finance in Israel has warned that if the war continues for a long time or spreads to other areas, it could lead to a recession and high unemployment.
The Israeli economy is facing tough challenges because of the war in Gaza. It's a complicated situation.
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Source: Al Jazeera + Bloomberg
