The war between Israel and Hamas will abruptly slow the Israeli economy this year and next and send the nation’s budget deficit soaring as the country ramps up spending to support the military, civilians and businesses during the conflict, the Bank of Israel said on Monday.
Many businesses have been forced to pause activity, and hundreds of thousands of Israeli reservists are now on active duty, while many people are in shelters.
Even so, he added, “it is clear that a shorter or longer duration, as well as any developments of the war to additional arenas,” would add uncertainty to the economic outlook.
The conflict has dealt a fresh blow to a resilient economy that until recently had been hailed as an entrepreneurial powerhouse.
Israel had low debt, a current account surplus and high foreign exchange reserves, although growth had begun to slow amid high interest rates, rising inflation and expectations of a slowdown in the global economy.
Persons:
“, Amir Yaron
Organizations:
Bank of Israel
Locations:
Israel, Jerusalem