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Lebanese Ministry of Health: Final toll from airstrike on car in Zebdine, Nabatieh District: Two martyrs, four injured
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Israeli shekel; one of the world’s worst performers since August

  • By Al Mayadeen English
  • Source: Bloomberg
  • 9 Oct 2024 19:23
4 Min Read

The Israeli economy is taking a hit as the wars on multiple fronts extend beyond the one-year threshold leaving the Israeli occupation's shekel depreciating by 3.4% against the dollar.

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  • People buy fruits and vegetables in a local market in Haifa, occupied Palestine, Friday, Aug. 16, 2024. (AP)
    People buy fruits and vegetables in a local market in Haifa, occupied Palestine, Friday, Aug. 16, 2024. (AP)

"Israel's" central bank is likely to maintain its interest rate at 4.5% for the sixth consecutive time due to rising inflation driven by the ongoing wars in Gaza and Lebanon, according to a Bloomberg report citing 16 surveyed analysts.

Despite a global trend of rate cuts, the Bank of Israel has been constrained, the report noted before citing the Governor of the occupation's central bank, Amir Yaron, as saying that rate reductions may not occur until the second half of 2025 "despite the economy slowing as war hits industries from tourism to agriculture and construction."

Moreover, the report underscored that the Israeli occupation's currency, the shekel, has depreciated by about 3.4% against the dollar since late August and that "Israel's" credit risk premium has reached its highest point in 12 years.

The economic situation has worsened, the report noted, as the Israeli occupation forces expanded their wars on multiple fronts, including Lebanon and Iran, in addition to the Palestinian fronts that are coupled with stalled ceasefire talks.

The report further highlighted the recent credit downgrades from Moody's and S&P Global Ratings, stressing that the ongoing war has strained "Israel's" fiscal situation, with the budget deficit hitting 8.3% of GDP as of August.

Adjustments to the 2024 budget are anticipated, and the 2025 plan is expected to propose spending cuts and tax hikes, Bloomberg explained, adding that if fiscal policies continue to be expansionary, the Bank of Israel might need to counterbalance by raising interest rates to curb inflation which is forecasted to "climb to 5% in early 2025".

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October saw $4.3Bln decrease in 'Israel's' forex reserves

'Israel' 2025 budget focuses on funding genocidal wars, economy second

War is costing Israeli economy over $66.6 billion: Smotrich

Israeli Finance Minister Bezalel Smotrich acknowledged that the ongoing "war is the longest and most expensive war in Israel’s history" with direct costs amounting to approximately 250 billion shekels ($66.6 billion) so far.

He further emphasized that this figure is likely to increase, stating, "We will all feel the need to finance this war, and it will not be easy for us."

Meanwhile, Gad Lior, a journalist for Ynet News, offered a sharp critique of Smotrich's presentation of the economic situation during an interview with Ynet Studio on Tuesday. He argued that Smotrich's analysis lacked a solid grasp of economic principles and failed to acknowledge the prevailing realities affecting the Israeli economy. 

Lior highlighted Smotrich's characterization of Moody's report as "weak and absurd," stating that "economists in London will not lecture us." He warned that such remarks could encourage credit rating agencies to continue downgrading "Israel's" rating and pointed out that Smotrich's information about the headquarters of Moody's and its management was incorrect.

Lior emphasized that "in the dangerous situation affecting the Israeli economy during Smotrich's tenure, the minister dares to use harsh words attacking rating agencies due to his complete ignorance."

He added that "what is concerning is that the person at the helm of the economic system in Israel lacks an understanding of sensitive and complex economic processes."

In this context, he noted that there is a consensus among economists, both in "Israel" and globally, that the Israeli economy has not been managed responsibly over the past year.

Read more: Escalations with Iran, Hezbollah cost 'Israel' billions: Israeli media

  • Israel
  • Israeli occupation
  • shekel
  • Israeli economy
  • Interest rate
  • inflation
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