Israeli Economy Grows 1.2% in Q2 Amidst Gaza Conflict
Israel's economy grew at an annualized rate of 1.2% in the second quarter of 2024, according to the Central Bureau of Statistics. This figure fell short of the 4.4% growth projected by a Reuters consensus. The growth was driven by a 12% increase in consumer spending, an 8.2% rise in government spending, and a 1.1% increase in investment in fixed assets, which offset an 8.3% decline in exports.
The economic performance has been volatile since the onset of the conflict in Gaza with Hamas in October. The first-quarter GDP was revised to 17.3%, up from an earlier estimate of 14.4%, recovering from a 20.6% contraction in the fourth quarter of 2023. Despite the slower growth in the second quarter, the Central Bank of Israel is not expected to cut interest rates due to rising inflation, which has increased to 3.2%, exceeding the government's target. The bank has kept its benchmark interest rate unchanged since January amid geopolitical tensions and price pressures.
