Analysts expect Israel’s GDP to contract by up to 8% in the fourth quarter

Israel’s GDP could contract by 7.8% in the fourth quarter of 2023 compared to the same period in 2022 amid the economic fallout from the war with Hamas in the Gaza Strip. It could be the worst quarterly contraction since 1995, excluding 2020 at the height of the coronavirus pandemic. At the same time, the GDP growth rate for the entire 2023 will slow down to 2.6% at the end of the year (versus 6.5% in 2022), according to calculations by Bloomberg Economics analysts, which Vedomosti has.

The main reasons for the economic contraction are the mobilization of more than 360,000 male reservists to participate in the IDF ground military operation in the Gaza Strip (8% of the country’s employed population – 4.36 million people), which provoked a shortage of personnel in the labor market. Another factor is low household consumer expectations. Finally, the Israeli government’s restrictions on movement around the country, which impede the flow of goods and labor, are weakening economic activity.