BoI: Operation Protective Edge cost Israel GDP NIS 3.5b

Iron Dome

Decline in demand negatively impacted tourism services and private non-durable consumption, the Bank of Israel reports.

The loss of GDP deriving from Operation Protective Edge is estimated at around NIS 3.5 billion, about 0.3% of annual GDP, says the Bank of Israel in its annual report for 2014. The Gaza conflict raged for 50 days in July and August 2014. The Bank of Israel said, "This negative impact was caused by the demand side, while the supply side maintained relative stability."

The decline in demand negatively impacted tourism services and private nondurable consumption, the Bank of Israel continued. "The negative impact on tourism is characteristic of military conflicts, though the decline in nondurable goods consumption was unusually formidable."

On the supply side, Israel’s economy was more resilient than in previous conflicts, as indicated by the stability in export data and in the Industrial Production Index.

The Bank of Israel estimated that the loss suffered by tourism services exports in 2014 due to Operation Protective Edge reached NIS 2 billion, about 0.2% of annual GDP. The GDP loss attributed to private consumption was estimated at about NIS 1.5 billion, most of which derived from a decline in services consumption, and a minority of which derived from a slowdown in the growth rate of food, beverages, and tobacco consumption. Private consumption recovered nearly immediately, and the negative impact was entirely in the third quarter.

Published by Globes [online], Israel business news - www.globes-online.com - on March 16, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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