Israeli Economy Shrinks 21% in the Last Quarter Due to War

The war in Gaza has impacted economic growth in Israel in the last three months of 2023 slightly more than expected. The Central Bureau of Statistics reported in its third estimate that "the Israeli economy contracted by 21% in the last quarter on a year-on-year basis compared to the third quarter." This follows a decline of 19.4% in the initial estimate, which was revised last month to a contraction of 20.7%. The war erupted following Hamas's attack on southern Israel on October 7, leading to sharp declines of 22.5% in exports, 26.9% in private spending, 67.9% in investment in fixed assets, and 42.4% in imports during the last quarter. However, government spending surged by 83.7%. Additionally, the bureau announced that the annual inflation rate unexpectedly rose to 2.7% in March, up from 2.5% in February.