The OECD (Organization for Economic Co-operation and Development) predicted some unwelcome news for Israel in 2024 as a result of the ongoing Iron Swords War in Gaza. This is in contrast to a brighter picture that the organization painted before the barbaric Hamas terror attack on October 7.
“The economic impact of the evolving conflict following Hamas’s terrorist attacks on Israel on 7 October is highly uncertain and depends on the duration, scope and intensity of the conflict,” the OECD stated in its report on Israel’s economy. “Supply side disruptions due to the security situation and the significant decline in the civilian labor force, together with weakening economic sentiment, will mainly affect private consumption and investment.”
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The OECD predicts that at the end of 2023, Israel will have a fiscal deficit of 3.1% of GDP, and of as much as 5.2% of GDP in 2024.
The OECD lowered its forecast for Israel’s GDP for 2023 to 2.3%, down from its previous prediction of 2.9% released in The organization also lowered its forecast for GDP in Israel for 2024 to 1.5%, after previously predicting that it would be 3.3%. That’s after the
The OECD expects Israel’s debt-to-GDP ratio to expand to 65% by 2025. The Bank of Israel forecast a fiscal deficit of 3.7% of GDP at the end of 2024, widening in 2024 to 5% of GDP, while it sees the debt-to-GDP ratio reaching 66% in 2024.
The war is obviously causing major disruptions to Israel’s economy. Foreign airlines cancelled all flights to the country and tourism, a major part of Israel’s economy, has dried up. Also, several hundred thousand Israelis are away from their jobs performing reserve duty in the IDF.
Small businesses, especially in the entertainment sector, are also hurting as Israelis are only now slowly returning to their usual nightlife routines. And the country’s agricultural sector has been deviated too because of all of the farms located near Gaza and the border of Lebanon in areas that needed to be evacuated.
But the OECD is also concerned with the uncertainty about how long the war will last.
“The uncertainty about the duration, scope and intensity of the conflict and hence its economic impact is large. The projections assume no further regional escalation of the conflict with the main economic impact confined to the last quarter of 2023 and to a lesser extent the first quarter of 2024.”
