Listen to the audio version of the article
Israel’s gross domestic product collapsed by 19.4% in the last quarter of 2023 in annualized terms compared to the previous period, due to war in the Gaza Strip. This is what emerges from the data of the Central Statistics Office. Over the year, the Jewish state’s GDP grew by 2%, against the Israeli Central Bank’s forecast for a 2.3% increase at the end of October, less than a month after the Hamas attack. The last quarter of 2023 was the worst, in terms of GDP per capita, since the first quarter of 2020, marked by the Covid-19 pandemic.
Consumption and foreign trade collapse
Private consumption fell by 27% on an annualized quarterly basis, due to the collapse in demand and consumer confidence in the early war period. Exports fell 18%, while imports slumped 42%, the data showed.
The economic downturn was much more severe than expected and highlights the extent of the damage done by Hamas attacks and the war, Liam Peach, senior emerging markets economist at Capital Economics, said in a note.
The worst drop since Covid
The fourth-quarter decline was the largest since the second quarter of 2020, when GDP fell 29.0% as the coronavirus pandemic hit businesses.
“While the recovery looks set to take hold in the first quarter, GDP growth in 2024 as a whole now looks set to register one of the weakest rates on record,” Peach added.