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Affected by the Gaza War – Israel’s economy shrinks by 1.4% in the first quarter of 2024

Tel Aviv – Ma’an – Israel’s economy shrank by 1.4% during the first quarter of the current year compared to the corresponding quarter of last year, amid the continuing consequences of the Gaza war on the joints of the economy.

This is the second quarterly contraction in a row, as it comes after another contraction of 21.7% in the last quarter of 2023, which coincided with the outbreak of the war on Gaza.

Per capita GDP fell 3.1% year-on-year.

Statistics Office figures added additional burdens to the Israeli government, which tried to increase spending in the local market, as part of efforts to strengthen the local economy affected by the consequences of the war and tensions in the north with Hezbollah.

Public spending in Israel rose by 7.1% in the last first quarter on an annual basis, after an unprecedented rise of 86% in the last quarter of 2023, mainly due to defense spending.

While the Bank of Israel, which is conservative about broad government spending, expected the local economy to grow by 2% in a
ll of 2024, the International Monetary Fund’s forecasts, issued last April, were more pessimistic.

However, according to the Israeli census, the local economy will actually be in a contraction phase as long as growth rates are less than 2.1%, taking into account the natural increase of the population, meaning that zero growth of the economy amounts to 2.1%.

Israel’s economy grew by 2% in all of 2023, compared to 6.8% in 2022, a growth of 8.6% in 2021, and a contraction of 1.9% in the Corona year 2020.

A report issued by the Rise Israel Research Institute, last month, revealed that investment in the technology sector in Israel has decreased by 30% since the outbreak of the war in the Gaza Strip.

The report reviews the local technology industry in light of the war, describing the decline in investment in the sector as ‘worrying’ and calling for the activation of a state of emergency in the sector.

The investment rate was the lowest since 2017, and taking into account the rise in the dollar index against th
e shekel, the investment numbers are considered the lowest since 2015.

‘As the number of domestic and foreign investors is declining, sentiment toward Israel on the part of workers and investors in the global technology sector is also declining,’ the report says.

According to the number mentioned in the report, the total investment in the last quarter of 2023 amounted to about $1.7 billion, and in the first quarter of 2024, about $1.6 billion.

The two figures represent a decline of 31% compared to the two quarters that preceded the war that broke out on October 7, and a decline of 34% compared to the last quarter of 2022 and the first quarter of 2023.

Last April, the month of Passover in Israel, a small number of tourists coming to Israel were recorded, with a number not exceeding 81.2 thousand tourists, according to data from the Central Bureau of Statistics.

While in the first four months of this year, 287.9 ??thousand tourist arrivals were recorded, representing only 22% of the total tourism arrivals
on an annual basis.

There was also a significant decline in tourism coming from Israel during the first four months of this year, to 1.68 million people, compared to 2.787 million in the corresponding period last year.

In 2022, 2.67 million tourists entered Israel, and in 2023, 3.01 million tourists entered, at a time when expectations indicated a visit of 3.9 million.

Source: Maan News Agency