In the tenth month of the Swords of Iron war, Israel stands at a crossroads in terms of the continued fighting in the Gaza Strip and the broader campaign against Iran and the “Axis of Resistance,” which are directly involved in the conflict. Every decision about the future will undoubtedly have significant economic consequences, especially considering that the projected budget deficit for 2024 is expected to significantly exceed the forecast underlying the current state budget. This is further compounded by the impact of the war on...
Following the local elections in Turkey at the end of March, which saw President Erdoğan’s ruling Justice and Development Party defeated in major cities, Turkey has implemented a series of harsh measures against Israel in response to the war in the Gaza Strip. Some of these measures deviate from Ankara’s previous policies, which had also led to a deterioration in relations between the countries during previous Israeli operations in Gaza. This deviation from past policies necessitates reexamining the bilateral ties and for Israel to...
The war between Israel and Hamas is expected to have a significant negative impact on the Israeli economy. Estimates place the direct cost of the conflict (armament and mobilization of the reserves) and the indirect costs (population evacuation, reconstruction of the western Negev, interruptions to the manufacturing process, and reduced aggregate demand) at around NIS 200 billion. If these predictions are accurate, Israel would experience a 10 percent drop in GDP in the fourth quarter of 2023 and won’t experience any GDP per capita...
Since the Hamas terror attack in the Negev on October 7 and the start of the war in Gaza, there have been escalating attacks by the Houthi terror organization, disrupting navigation in the Bab el-Mandeb Strait. The stated aim of the organization, one of the most prominent Iranian proxies, is to harass and damage ships linked directly or indirectly to Israel, in response to Israel’s operations against Hamas in the Gaza Strip. However, most of the Houthi attacks so far have damaged ships that have no link to Israel. In view of the...
This document details the insights gleaned thus far from research on the main challenges facing continued food supply to Israel during the current emergency situation. It sketches different scenarios that could develop in the war and indicates what is needed to ensure the ability to continue to produce food in Israel at the end of the war and thereafter.
Immediate intervention by the state is necessary to ensure stable food supply while preventing the collapse of local agricultural production in the long term. This requires the...
This paper surveys the trends in trade between Israel and China, in both goods and services, over the past decade (2013–2022). Especially noticeable is the significant and consistent rise in trade with Israel during those years, based mostly on the import of goods from China, which totaled $17.62 billion in 2022. The imports from China are diverse and include machinery for infrastructure and construction projects, consumer products ordered from Chinese websites, which to some degree has mitigated the rise in the cost of living in...
Israel’s new government faces many important challenges that may well shape the face of the state for years to come. One of the existential challenges facing the country is integrating the ultra-Orthodox population into the fabric of society and the economy. This is not only vital today, but it is crucial when looking ahead. The impressive level of economic growth that Israel recorded in the past 20 years, which led to a sharp increase in the quality of life, is now in danger because the positive trends clash with demographic...
Economic uncertainty has increased in recent months following the macroeconomic figures published by the major economies. The return of inflation, the supply chain crisis, and the war in Ukraine are leaving their mark on the global economy and arouse concern among both politicians and central banks. In contrast to most of the world’s countries, Israel seems like an island of economic stability: inflation is relatively low, and while Western countries are posting negative growth, second-quarter growth in Israel exceeded the...
Before the war, the Russian economy was projected to grow by 10.3% between 2020 and 2023. Following the outbreak of the warfare, the IMF projected that the Russian economy will contract in this period by 6.3%, yet recently the projected contraction was moderated to 5%.
The response to Islamic Jihad threats last week and Operation Breaking Dawn hurt the supply of essential goods to Gaza, including fuel, and suspended the entry of Palestinian workers into Israel. This complicates Gaza’s economic recovery. Gaza’s GDP shrank more than 13 percent with the outbreak of the COVID-19 pandemic. The graph charts GDP per capita in Gaza, 2019-2022.
The resumed employment of workers from the Gaza Strip in Israel over the last few years – after the suspension following the disengagement in 2005 – was intended to further the relative security calm and restrain Hamas from escalation. After the COVID-19 pandemic ebbed in October 2021, the income of Gazans entering Israel for work grew by more than six-fold, yet approximately one third of these workers paid for entry permits to Israel. Regulation of employment in Israel beginning in August 2022 may harm those employed in the...
