The Israeli economy recorded a contraction for the second quarter in a row, according to data from the Government Statistics Office, and this exacerbates the burdens of the government, which seeks to support the local economy in various ways in the face of the repercussions of the ongoing war on the Gaza Strip for the eighth month.
The Israeli economy contracted – according to the data – in the first quarter of this year by 1.4% on an annual basis. The economy shrank in the last quarter of last year by 21.7%.
All of this indicates that the direct and indirect repercussions of the war are still limiting the growth of the economy and placing a burden on the population of Israel, as the per capita GDP declined by more than 3% on an annual basis.
Technology and tourism are the most declining
The technology and tourism sectors are the most affected, as investment in the technology sector has declined by about 30% since the outbreak of the war in the Gaza Strip, according to the Research Institute Rides Israel, describing the decline as worrying and calling for the activation of a state of emergency.
As for the tourism sector, a sharp decline was recorded in the number of tourists, according to data from the Central Bureau of Statistics. During the first four months of the current year, the number of tourists coming to Israel decreased by 40% compared to the same period last year.
There are also developments that have prompted financial institutions and global credit rating agencies to present their expectations that the outstanding problems in other sectors, such as construction and agriculture, in addition to the high level of security tension at the regional level and the state of uncertainty and lack of political stability locally will hinder the desired recovery this year.
Therefore, Standard & Poor’s estimated that Israel’s GDP will grow this year by only about 0.5% this year, which is much lower than the estimates of the Bank of Israel, the Central Bank and the International Monetary Fund, which reach about 2%. But everyone agrees that the continuation of the war on Gaza takes the economy to an unknown fate.
Commenting on this, the Palestinian expert and researcher at the Institute for Economic Policy Research, Masif Jamil, said that no economy is immune from collapse or decline in light of any war, and this applies to the Israeli economy, which is largely supported by America and Europe.
He added – in an interview with Al Jazeera – that the economic effects of the war are clear, as the components of the gross domestic product lost a lot, and the only exception was public consumption, which rose by $70 billion, and this did not benefit the Israeli economy because it was directed to army consumption, which did not stimulate demand in the country. .
He detailed these components and the losses they suffered by saying that exports declined by 26%, imports decreased by 12%, and private consumption declined by 7.5%, meaning that at the end of 2024, estimates indicate that the gross domestic product in Israel will decline by 5.7%, and this is a large and significant percentage. preceded.
He pointed out that the foreign aid that Israel receives from America and European countries is mostly directed toward military support, and regardless of its size, it will not serve to revive the Israeli economy.
He stressed that the Israeli economy is in a critical condition and has received a severe blow during the past eight months, estimating the size of its loss at about 300 billion shekels ($82 billion), because the Bank of Israel estimated it at about 260 billion shekels ($71 billion) until last March.