Israel’s economy contracted sharply in the second quarter of the year, with gross domestic product falling 3.5% compared to the previous quarter, according to figures released Sunday by the Central Bureau of Statistics.
Officials attributed much of the slowdown to the ongoing impact of the 12-day war against Iran, which has disrupted economic activity.
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Nahalat Binyamin pedestrian mall in Tel Aviv empty during the war against Iran
(Photo: Lihi Gordon)
The business sector was hit particularly hard, shrinking by 6.2%, the bureau said. Private consumption dropped 4.1%, while public spending fell 1%. Investment in fixed assets plunged 12.3%, signaling weakening business confidence. Exports of goods and services, excluding startups and diamonds, declined 3.5%, while imports, excluding defense-related purchases, rose 3.1%.
Economists say the disappointing data reflects the toll of war on both consumer and business activity. “These numbers highlight a significant contraction, particularly in the private sector and investment, which could weigh heavily on recovery prospects,” one analyst said.
The figures are not expected to influence the Bank of Israel’s interest rate decision on Wednesday, but could affect the central bank’s next meeting on Sept. 29. Many economists believe the weak outlook increases the likelihood that policymakers may deliver the first rate cut of the year in an effort to stimulate growth.