A comprehensive report by S&P Global Market Intelligence's research department forecasts the impact of Israel's war in Lebanon on the entire Middle East.
The report says, "The Middle East and North Africa have been coping with a challenging economic situation in recent weeks, especially due to the escalation of conflicts in the Middle East. Israel's war against Hamas in Gaza and recently against Hezbollah in Lebanon, in addition to the strengthening tensions between Iran and Israel, reinforce the concern of a regional escalation of the war, which will include other countries in the region."
Growth will be reduced and inflation will stay far from the stability target
The harsh report indicates a difficult economic situation in Israel due to the heating up of the conflict in the north. GDP will contract in Israel this year, according to S&P with negative growth of 0.2%. Growth will also be reduced in the coming years with the report predicting 3.2% growth in 2025 and 3.6% growth in 2026. The fiscal deficit is seen reaching 9% this year and remaining high at 6% next year and 5% in 2026. The report stresses that there could be changes due to developments in the war.
The report does not see inflation falling to the annual target range of 1%-3% and thus does not expect the Bank of Israel to cut the interest rate.
The report was written before Israel's attack on Iran last weekend.
Published by Globes, Israel business news - en.globes.co.il - on October 28, 2024.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.