Israel's economy slumps in the fourth quarter as war takes a toll

Israel’s economy contracted sharply in the final quarter of 2023 due to the war with Hamas in Gaza. The country’s Gross Domestic Product (GDP) fell 19.4% compared to the previous quarter. The conflict is estimated to cost Israel 255 billion shekels ($70.3 billion) by the end of 2025, or around 13% of GDP. The central bank has revised its GDP growth forecast for this year from 3% to 2% as a result of the war. Moody’s recently downgraded Israel’s credit rating, citing political risk and deteriorating public finances. The country remains at risk of further economic impact if the conflict escalates.