War on Gaza forces Israeli Finance Ministry to slash growth forecast
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The war on Gaza, in addition to the Israeli occupation's attempts at confronting the Lebanese Resistance in the north, has increased spending and Israeli economic imbalance.
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An exterior view of the headquarters of the Bank of Israel, the occupation's central bank on August 23, 2022 (AFP)
The Israeli Finance Ministry has lowered its growth forecast for this year, highlighting the economic strain caused by the almost year-long war on Gaza.
According to new data on the Ministry's official website, the gross domestic product would expand by 1.1%, down from 1.9% previously. The estimate for 2025 has been reduced to 4.4% from 4.6%.
The latest prediction, based on "weaker-than-expected" statistics in the second quarter, suggests the occupation's economy would expand at its worst pace this year since about 2009, except for the Covid-19 epidemic in 2020.
The war on Gaza, in addition to the Israeli occupation's attempts at confronting the Lebanese Resistance Hezbollah in the north, has increased spending and Israeli economic imbalance. The Israeli economy has been severely harmed resulting in higher deficits, worse credit ratings, a damaged tourism sector, and continued public spending.
"Israel" was downgraded for the first time and local-currency bond rates have also increased sharply relative to US Treasuries, signaling investor concern.
Israeli authorities anticipate that the aggression would cost around $66 billion by the end of next year, accounting for more than 12% of GDP.
Fitch Ratings downgraded "Israel's" debt rating to A from A+ last month, stating that the war could extend into 2025 and the fiscal deficit might reach 7.8% of GDP this year, rising from 4.1% in 2023.
Last month, the Bank of Israel’s deputy governor, Andrew Abir, told Bloomberg that he doubts conditions would improve before the end of the year, expressing that “the surprise has been how long the war has been going on."
Israeli economy 'is a sinking ship': Israeli media
Israeli Finance Minister Bezalel Smotrich does not have a clue about the economy amid his nonchalance toward the worsening economic situation in "Israel" in light of the 11-month multi-front war, Israeli Maariv journalist Natan Zahavi said at the end of last month.
According to Zahavi, Smotrich, who has a controversial past, is color-blind and does not see the flashing red lights warning that the ship is on the verge of crashing and sinking. He also "neglects the investors that are abandoning the sinking ship, and he does not listen to the directors of credit rating companies who downgrade Israel's rating and warn of the seriousness of the situation and downgrade the rating again."
Smotrich also does not realize that tourists are no longer visiting "Israel" and that hotels and tourism companies lack revenue while the minister ignores their cries for help.
"The arrogant, over-confident Smotrich is using public funds as if they were his own, distributing interest and grants to sheep from his pastures and turning a blind eye to the farmers whose fields were burned by the fires of Gaza and Hezbollah," Zahavi added.
He also addressed the worsening state of the healthcare system, exposing the sharp deficit in doctors, psychologists, and budgets for the rehabilitation of those impacted by the war, in addition to the immigration of doctors to work abroad and not return.
Moreover, the cost of living and airfare prices in "Israel" are skyrocketing, with the latter being the highest in the world, in addition to "increasing reports from economics departments about high-tech technicians leaving abroad."
