Al Mayadeen English

  • Ar
  • Es
  • x
Al Mayadeen English

Slogan

  • News
    • Politics
    • Economy
    • Sports
    • Arts&Culture
    • Health
    • Miscellaneous
    • Technology
    • Environment
  • Articles
    • Opinion
    • Analysis
    • Blog
    • Features
  • Videos
    • NewsFeed
    • Video Features
    • Explainers
    • TV
    • Digital Series
  • Infographs
  • In Pictures
  • • LIVE
News
  • Politics
  • Economy
  • Sports
  • Arts&Culture
  • Health
  • Miscellaneous
  • Technology
  • Environment
Articles
  • Opinion
  • Analysis
  • Blog
  • Features
Videos
  • NewsFeed
  • Video Features
  • Explainers
  • TV
  • Digital Series
Infographs
In Pictures
  • Africa
  • Asia
  • Asia-Pacific
  • Europe
  • Latin America
  • MENA
  • Palestine
  • US & Canada
BREAKING
Israeli media: Intense US efforts are being made to resolve differences, such as the issue of the Israeli presence on Mount Hermon and in southern Syria
Israeli media: The security agreement means amending the disengagement agreement, which will also address the Druze issue
Israeli media: Attempts to reach a security agreement between 'Israel' and Syria were among the topics discussed at the Paris meeting
Israeli media: Sheikh Muwaffaq Tarif rejected a US proposal to join the recent tripartite meeting between Tom Barrack, al-Shaibani, and Dermer
Saba News Agency: Two martyred, five injured in a preliminary toll of the Israeli aggression on the Yemeni Oil Company station on Al-Sitteen Street in Sanaa
Senior Yemeni military source to Al Mayadeen: We observed a state of confusion among the enemy's aircraft squadron after Yemeni air defenses intercepted the attack
Senior Yemeni military source to Al Mayadeen: The Yemeni air defense forces succeeded in neutralizing a squadron of enemy aircraft and prevented airstrikes on some governorates
Senior Yemeni military source to Al Mayadeen: Our air defenses and missile forces forced a formation of enemy aircraft to flee the airspace
Member of the Ansar Allah Political Bureau, Mohammed al-Bukhaiti: The Israeli aggression on Yemen will not deter us from continuing to support Gaza, no matter the sacrifices
Al Mayadeen's correspondent: The Israeli aggression targeted the Yemeni Oil Company station on Al-Sitteen Street, southwest of the capital, Sanaa, with several raids

Israeli economy stalls: 0.7% growth, 3.6% inflation, credit cut

  • By Al Mayadeen English
  • Source: Agencies
  • 11 Feb 2025 16:39
4 Min Read

Despite its efforts to maintain financial stability, "Israel’s" war economy is proving unsustainable.

Listen
  • x
  • A woman checks the pomegranates displayed at a street market in Haifa, occupied Palestine, Friday, Aug. 16, 2024. (AP)
    A woman checks the pomegranates displayed at a street market in Haifa, occupied Palestine, Friday, Aug. 16, 2024. (AP)

The Jerusalem Post on Tuesday reported that "Israel's" economy continued to struggle in the second half of 2024, as its war on Gaza deepened financial instability and eroded investor confidence. According to the Bank of Israel's latest financial stability report, macroeconomic risks remain high despite minor improvements in credit and asset pricing.

The central bank's risk assessment, which evaluates the exposure of "Israel's" financial system to macroeconomic challenges, found that economic instability persisted due to the security situation. The report pointed to the war's impact on global perceptions of "Israel's" economy, affecting businesses, government finances, and borrowing costs. The observations are in line with projections from the International Monetary Fund (IMF), which recently revised "Israel's" 2024 GDP growth forecast down to 0.7%, citing regional conflicts and heightened uncertainty as major concerns.

Despite a somewhat modest GDP growth following a contraction at the end of 2023, "Israel's" economy has yet to regain its expected trajectory. "The Composite State of the Economy Index, which indicates the level of economic activity, continued to be sluggish in October and November," the Bank of Israel stated, noting that economic conditions remain difficult. Meanwhile, the Organisation for Economic Co-operation and Development (OECD) predicts that "Israel's" GDP will grow by 2.4% in 2025 and 4.6% in 2026, largely driven by increased military expenditure and government demand.

The government's increased fundraising efforts and higher bond yields reflected investor concerns. Additionally, Moody's recently downgraded "Israel's" credit rating from A2 to Baa1, warning that the prolonged war could continue straining the economy.

Financial Market and Real Estate Trends

Related News

Yemen: 6 Martyred, 86 Wounded in Israeli Aggression on Sanaa

'Israel' in talks to displace Palestinians to South Sudan

The risk level associated with asset prices fell from "high" to "moderately high" over the past six months. While Israeli stock indices have recovered in recent months, they remain lower compared to global markets, suggesting that investors still perceive elevated risk.

The real estate sector, however, continued to experience rising apartment prices, a trend that began earlier in the year. The credit market also showed stabilization, as late debt repayments remained historically low, leading to a downgrade in credit risk from high to moderately high.

Monetary Policy and Inflation

With inflation at 3.6% as of August 2024, exceeding the government's target of 1%-3%, the Bank of Israel has maintained its benchmark interest rate at 4.5% for the sixth consecutive meeting. The central bank has stressed the need to stabilize markets and reduce uncertainty while ensuring that monetary policy supports economic activity.

Key Risk Scenarios

The Bank of Israel outlined two major risks facing the economy:

  • Escalating Security Concerns – The continuation of the war with Hamas and potential geopolitical deterioration could lead to: Increased security spending, workforce disruptions due to reserve call-ups, and growing international pressure affecting trade and investments.
  • Global Economic Slowdown – De-globalization trends and sluggish global growth may further challenge "Israel's" economy. This aligns with concerns from JPMorgan, which recently cut its 2024 growth forecast for Israel from 1% to 0.5%, citing geopolitical instability and reduced investor confidence.

Labor Market and Sectoral Disruptions

The war has negatively impacted various sectors, particularly construction and agriculture, where workforce shortages have emerged due to the reduction in Palestinian and migrant labor. Efforts to mitigate these disruptions include incentivizing Israeli workers and increasing mechanization, but the impact remains significant.

Read more: 'Israel' taps into Indian workforce despite weak security conditions

Meanwhile, the high-tech sector, which has been a key driver of "Israel's" economy, is also experiencing labor shortages and a slowdown in investments, further complicating the economic outlook.

Overall, despite its efforts to maintain financial stability, "Israel’s" war economy is proving unsustainable. While its financial institutions remain operational, the broader economic structure is weakening under the weight of military aggression, diplomatic isolation, and growing opposition to its occupation policies.

  • Israel
  • Israeli economy
  • Bank of Israel

Most Read

Tom Artiom Alexandrovich, executive director of the defense division of the Israeli National Cyber Directorate, undated (Social media)

Israeli-born US prosecutor drops Israeli officer child sex crime

  • Politics
  • 19 Aug 2025
Displaced Palestinians walk through a makeshift camp along the beach in Gaza City, Sunday, Aug. 10, 2025 (AP)

Hamas, other factions accept Egypt-Qatar ceasefire proposal: Exclusive

  • Politics
  • 18 Aug 2025
Palestine will not be liberated by UN reports, but by pursuing a different strategic horizon: one that does not beg for recognition. (Al Mayadeen English; Illustrated by Batoul Chamas)

Economy of Genocide: Albanese's report accuses, but doesn't dismantle system

  • Opinion
  • 18 Aug 2025
Israeli soldiers stand on the top of armoured vehicles parked on an area near the Israeli-Gaza border, as seen from southern Israel, Wednesday, Aug. 20, 2025 (AP)

Palestinian fighters target Israeli soldiers, vehicles in Gaza

  • Politics
  • 21 Aug 2025

Coverage

All
The Ummah's Martyrs

Read Next

All
Israeli Prime Minister Benjamin Netanyahu speaks during a press conference at the Prime minister's office in al-Quds, Occupied Palestine, Sunday, Aug. 10, 2025 (AP)
Politics

Netanyahu deliberately derailing truce with Gaza occupation: Hamas

Irish President Michael Higgins arrives to deliver his speech during a 42nd World Food Day celebration at FAO headquarters in Rome, on Oct. 16, 2023. (AP Photo/Alessandra Tarantino)
Politics

Irish president renews call for UN military intervention in Gaza

US Ambassador to Turkey and Special Envoy to Syria Tom Barrack speaks during an interview with The Associated Press at the US Embassy in Aukar, northern suburb of Beirut, Lebanon, Monday, July 21, 2025 (AP)
Politics

US envoy, Netanyahu discuss restraining attacks on Lebanon, withdrawal

Smoke billows following Israeli airstrikes in multiple areas in Sanaa, Yemen, Sunday, Aug. 24, 2025 (AP)
Politics

Ansar Allah vow sustained Gaza support despite Israeli strikes

Al Mayadeen English

Al Mayadeen is an Arab Independent Media Satellite Channel.

All Rights Reserved

  • x
  • Privacy Policy
  • About Us
  • Contact Us
  • Authors
Android
iOS