Israel cut its economic growth rate in the second quarter from previously reported preliminary figures as the fallout from the war on Gaza continued, data showed Monday.
Israel’s Central Bureau of Statistics said in its second estimate that gross domestic product grew by 0.7% year-on-year in the second quarter (from April to June).
A preliminary estimate last month showed the economy grew 1.2% year-on-year in the second quarter.
First-quarter GDP growth was revised slightly to 17.2% from 17.3% quarter-on-quarter, as the economy recovered from a sharp contraction in the fourth quarter of 2023 when the war began.
Growth forecast
The Israeli Ministry of Finance has lowered its growth forecast for the current year, confirming the pressures imposed by the war that has been ongoing for nearly a year.
Gross domestic product is expected to rise by 1.1%, according to figures updated on the ministry’s official website this month, down from the previous figure of 1.9%. The forecast for 2025 has been cut to 4.4% from 4.6%.
The Israeli economy is expected to grow at its slowest pace this year since 2009, except for the peak of the coronavirus pandemic in 2020.
Israel’s economy is expected to grow at its slowest pace this year since 2009, excluding the peak of the coronavirus pandemic in 2020.
Israel’s credit rating was downgraded for the first time in its history. Yields on local currency government bonds rose sharply compared to US Treasuries, indicating nervousness among investors.
Israeli officials have estimated the cost of the war until the end of next year at about $66 billion, an amount equivalent to more than 12% of the gross domestic product.
Government borrowing has exceeded NIS 200 billion ($53.5 billion) since the beginning of the year, one of the largest borrowing operations ever in the country.
