In the last quarter of 2023, Israel was simultaneously reeling from the shock and trauma of the October 7 Hamas attack on the cities and kibbutzim of the Gaza Envelope and mobilizing for a campaign of revenge and retaliation. Over 200,000 Israelis were evacuated from communities bordering the Gaza Strip and Lebanon, and some 300,000 reservists were mobilized.
In the following months, the Israeli economy was dislocated. Consumer spending, imports, and exports declined dramatically. Ultimately, nearly 50,000 businesses went bankrupt.
Meanwhile, Israel’s global brand is in the trash can. Its genocidal campaign in Gaza put it in bad odor among progressive circles worldwide and across much of the Global South. But the economic disruption that Israel has experienced to date has been manageable for its leaders.
Gross Domestic Product (GDP), the total monetary value of goods and services, is a common crude indicator of economic health. By that standard, the Israeli economy was in distress in late 2023. In the final quarter of the year, GDP shrank by 19.4 percent. Annual GDP growth for 2023 was only 1.8 percent, down from 6.5 percent in 2022.
The economic disruption that Israel has experienced to date has been manageable for its leaders.
For comparison, the US economy grew by 2.9 percent in 2023 and 2.5 percent in 2022. These are considered “good” numbers for a developed capitalist economy. Israel’s rate of GDP growth exceeded the United States in every year from 2015 to 2023.
War-related costs, which the Bank of Israel estimated at $80 billion from 2023 through 2025, drove Israel’s 2024 government budget deficit to nearly 7 percent of GDP — more than double the EU’s guideline of 3 percent of GDP for Eurozone member states. By raising taxes, the government brought its 2025 budget deficit down to 4.7 percent of GDP, still well above the EU’s benchmark. For comparison, the Congressional Budget Office estimates the 2025 US budget deficit to be 5.9 percent of…
Auteur: Joel Beinin
