Israeli Economy Takes a Severe Hit: GDP plummets nearly 20% amidst escalating conflict in Gaza

By Team Asianet Newsable | First Published Feb 21, 2024, 4:06 PM IST

As conflict intensifies in the Middle East region, Israel grapples with a staggering economic downturn, with its Gross Domestic Product (GDP) plummeting nearly 20%. The war's far-reaching impact on various sectors has prompted concerns about the nation's financial stability.

The economic condition of Israel has worsened after entering into a war with Hamas in Gaza. Israel’s economy plummeted by almost 20 percent in the fourth quarter of the previous year. This comes as the private, public spending aspect went down and even falling investments contributed to the dwindle.

According to Israel's Central Bureau of Statistics, in the fourth quarter of 2023, the Middle East nation's GDP fell by 19.3 percent. The data released is in comparison to the third quarter of 2023 which was before the conflict against Hamas broke out. Israel's GDP grew by 2.7 percent in the third quarter.

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The spending power of public and private parties fell down as the war ensued in Gaza. Private consumption in the fourth quarter fell by 27 percent while public consumption fell by a mammoth 90 percent. The possible reasoning behind such a stark fall in public consumption is because the state machinery was entirely diverted to the most immediate national security issue.

Even the investment in Q4 fell by 70 percent giving a headache to the Israeli government. Israel has been trying to fix the economy after the breakout of the war which involves introduction of various new initiatives. Israel conducted a hiring drive recently in India to hire a large skilled labour group with attractive incentives.

On a whole, Israel's economy grew by 2 percent in 2023 despite the conflict in the region. Israel Defence Forces after destroying Hamas in Gaza are now moving towards Rafah to conduct another set of military operations. Israel has vowed to end Hamas in the coming weeks.

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