Despite the war, Israel's gross domestic product grew by 1 % in 2024, above the initial expectations, the Central Bureau of Statistics is in its first evaluation. However, this figure reflects the domestic GDP growth of the individual of 0.3 %, due to population growth last year, after the growth of the domestic GDP of the individual of 0.1 % in 2023.
The data indicates the continued recovery in the last quarter of 2024, with 2.5 % growth on an annual basis, after a 5.3 % jump in the third quarter. However, the Central Bureau of Statistics notes that the gross domestic product level is still less than the pre -war period. Final growth numbers for 2024 are higher than the latest expectations of economic institutions. The Ministry of Finance expected 0.4 % growth, the Bank of Israel estimated 0.6 %, and the Organization for Economic Cooperation and Development also expected 0.6 %. MOODY credit rating agency estimated 0.5 % low growth, and its rival S&P was the most pessimistic with zero forecast.
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The damage to the business sector activity
Along with the positive growth in the general level of GDP, there was significant damage to the main industries and business sector activity. Business output decreased by 0.6 % in 2024, with a total growth in the economy mainly supported by a sharp increase of 13.7 % in government spending to meet general needs, which was due to war expenditures to a large extent. Defense spending jumped by 43.3 %, while civil spending increased by only 4.2 %.
The construction sector is severely exposed, with a 13 % decrease in the GDP of the sector, against the backdrop of the severe shortage of workers during the war. Investment in residential construction decreased by 17.5 %, after 8 % decreased in the previous year. The technology sector was also struck, with a decrease of 4.3 % in the GDP of the information and communications sector.
Some of the signs of recovery were clear in the fourth quarter of 2024: the annual growth was 2.5 % driven primarily with a 9.5 % jump in private consumption and 14.7 % in the fixed asset investment. However, part of the increase in private consumption is due to the provision of vehicle purchases forward before the tax increases in early 2025, as indicated by the Central Bureau of Statistics.
It was published by Globes, Israel Business News – En.globes.co.il – on February 17, 2025.
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