The Jewish state’s economy grew less than expected in the second quarter of 2024 amid the ongoing war with the Hamas terror organization in Gaza, preliminary government data published on Sunday shows.
Israel’s gross domestic product grew at an annualized 1.2% rate in the April-June period compared to the previous three months, according to the initial estimate by the Central Bureau of Statistics.
Growth was led by increases in consumer spending (+12% on an annualized basis), government spending (8.2%) and investment in fixed assets (1.1%), offsetting a 7.1% decrease in exports.
Over the first half of 2024, the economy grew 2.5% at an annual rate, versus 4.5% in the same period last year, government figures said.
The Israeli economy rebounded at the start of this year, growing by an annualized rate of 17.3% in the first quarter following a 20.6% contraction in the last quarter of 2023, when the initial shock of Hamas’s Oct. 7 massacre and the ensuing war curbed consumer spending.
Last week, Fitch Ratings downgraded the state’s sovereign credit rating to “A” from “A-plus,” citing heightened geopolitical risks, the ongoing conflict in Gaza, and military activities on multiple borders.
The agency also noted that the extension of the war against Hamas terrorists, or broadening of the conflict, could further harm Jerusalem’s economy and public finances, leading to another downgrade.
The Prime Minister’s Office, responding to the news, said, “The Israeli economy is strong and is functioning well. The lowering of the rating is a result of Israel having to cope with a multi-front war that was forced on it. The rating will be raised again when we win—and we will win.”
