Israel's economy grew by 2% in 2023, the Central Bureau of Statistics reports, reflecting negative GDP per capita growth of 0.1%, because of population growth last year. This follows GDP growth of 6.5% in 2022. With the exception of 2020 when the Covid pandemic hit, and Israel's economy contracted by 2.5%, the last time the economy contracted was in 2009, following the global financial crisis.
The main hit to the economy over the past year was the level of investment, which fell 2%, and per capita consumption, which fell 2.8% in 2023. This was partly balanced out by high public spending, which rose 8.3%, mainly because of the war.
The Central Bureau of Statistics, in an unusual departure, explained the gloomy growth data. "The contraction of the economy in the fourth quarter of 2023 was directly affected by the outbreak of the Swords of Iron War on October 7. The composition of the GDP changed following the extensive mobilization of the reserves, payments for alternative housing for evacuees in accordance with the government plan, the lack of labor in the construction industry, and more."
In the fourth quarter of 2023, when the war broke out, saw the economy shrink at 20% on an annualized basis. The biggest hit in the fourth quarter was in the level of investment, which fell by 70%, while private consumption in the fourth quarter fell by 27% and public consumption fell by almost 90%.
In international terms, Israel was not the only country in which GDP growth fell in 2023. In Germany the economy shrank by 0.1%, in the UK the economy shrank 0.2% and in Sweden it shrank by 1.3%. On the other hand, Spain and Japan's economies grew by 2.7% and 2.2% respectively.
Published by Globes, Israel business news - en.globes.co.il - on February 19, 2024.
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