Occupied Jerusalem– With the entry of the Israeli aggression on Gaza strip On its 45th day, the features of the initial damage and losses incurred by the Israeli economy are beginning to unfold, with estimates that it is on its way for recession.
The latest of these estimates is a statement by the chief economist at the Israeli Ministry of Finance, Shmuel Abramson, who suggested that the extent of the damage and losses would expand, considering that Israel’s economy has been groaning under the weight of the aggression on Gaza since the seventh of last October, and he fears that its losses will worsen if a comprehensive war breaks out on the front. North with Hezbollah.
According to Abramson’s estimates – which were reported by the economic newspaper “De Marker” in a report today, Monday – the uncertainty and uncertainty regarding the course of the war in Gaza and the continuing escalation on the Lebanon front are matters that may affect economic activity and cause multidimensional damage to the Israeli economy.
According to Abramson, every month of war may result in a loss gross domestic product It amounts to between 8 and 9 billion shekels ($2.1 and 2.4 billion dollars), as well as future losses to the economy and labor market.
recession
According to Abramson’s forecasts, the loss of GDP in 2023 will reach 1.4%, which means that the rate Economic growth This year it will reach only about 2%, compared to previous expectations of growth of 3.4%.
Since the population of Israel grows every year by about 2%, the meaning of this growth is that there will be a stagnation in GDP per capita in Israel in 2024.
During the period of the Corona pandemic, the chief economist in the Ministry of Finance – who was then asked to provide the government with an updated assessment almost every week regarding the loss of gross domestic product, as the assessments were mainly based on the imposition of closures and their repercussions on the labor market and the movement of trade and the economy – considered that Israel’s economy is groaning under the weight of the aggression against Gaza.
But today, in light of the war on Gaza, the escalation on the front with Lebanon, and the displacement of Israelis from the fire zones in the south and north, the chief economist at the Ministry of Finance does not publish updated estimates regarding the damage to the gross domestic product as a result of the closure and displacement.
According to the newspaper, formulating such estimates under the current circumstances is not possible due to the inability to measure changes and developments and thus measure the expected damage.
Most sectors are affected
Geographically, the greatest damage occurs in the north on the Lebanon front and the south on the Gaza front, mainly in areas whose residents have been evacuated, as a large part of commercial activity in these areas has been disrupted.
But on the other hand, there is damage to certain commercial categories in all regions of the country, as the fields of entertainment, restaurants, cafes, events, parties, and civil aviation were severely affected by the war, and the tourism industry was also affected, with the exception of many hotels in which evacuated residents were accommodated.
More collateral damage is linked to the contraction of the labor market, noting that hundreds of thousands of the workforce in Israel are currently among the reserve forces participating in the war on Gaza. At the same time, due to the confusion in the education system and the complete or partial suspension of education, a large portion of Workers do not come to work, which reduces their productivity.
Opinions differ on the expected inflationary effects of the war. Some early estimates were that the war would damage the supply side and cause a sharp decline in the value of the shekel, thus creating new inflationary pressures.
But after the shekel rose in November and entered a kind of “war routine,” it appears that these expectations were at least partly wrong.
Subsidy applications
As for the labor market, in the period from October 7 to Sunday, November 19, 128,000 people applied for unemployment benefits and benefits from the National Insurance Institute, and 96,000 of them were placed on forced leave from work without receiving. On salary or unemployment benefits.
In comparison, there are usually about 20,000 new applications for unemployment benefits and benefits per month on average, 59% of whom are between the ages of 20 and 40, and 39% are between the ages of 41 and 67 years.
According to data from the Labor Office of the Israeli National Insurance Institute, about 70,000 people were added to the list of the unemployed last month, and this number is 3 times what it was in the same month last year, as 60% of new applicants were sent to obtain unemployment benefits. To leave without pay.
