Israel’s economy is facing challenges due to the ongoing expenses from its deadly war on Gaza, with the GDP growth forecast being revised down to 0.7% for the second quarter of the year. The state statistics bureau reported a 0.7% increase in GDP for April-June, with the private sector contracting by 2.7% but government funding rising by 8.2%. Despite a low jobless rate of 2.6% in August, exports and imports (excluding diamonds and weapons) saw declines of 8.4% and 9.3% respectively.
The budget deficit to GDP ratio also worsened, reaching minus 8.3% in August. Israel’s offensive on Gaza, ongoing since last October, has led to over 41,200 Palestinian deaths and significant budget spending. Critics accuse Prime Minister Benjamin Netanyahu of using the attacks for political gain, further straining the economy.
The impact of the war on Israel’s economy is evident, with shrinking exports and rising deficits. The country remains resilient, but the challenges from the conflict continue to affect its financial stability.
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