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Israeli economy plunges into recession

The Cradle | October 20, 2023

Israeli economists have reported a major recession due to the ongoing war against the Palestinian resistance factions. 

“Israel has entered the war, and it is in a recession, and trade is currently zero,” Israeli daily business paper, The Marker, noted. 

The Israeli economy has taken a serious hit at the hands of Operation Al-Aqsa Flood, losing $3 billion in damages on the first day of the war alone, a state that some economists say is worse than it was during their 2006 war with Hezbollah. 

The Marker report went on to say, “the second week of the war is about to end, a week when there is almost no trade in Israel, and many are trying to stay with their heads above the water, afraid of the future – and they still don’t know who will compensate them and when?”

US economic risk analysis firm Moody’s has put the Israeli A1 rating, a high rating attractive to any investor, on hold, given the current crisis. 

Fitch Ratings had also negatively reviewed Israeli economic status, placing their credit score on a negative watch earlier this week. 

“While not our base case, such large-scale escalation, in addition to human loss, could result in significant additional military spending, destruction of infrastructure, sustained change in consumer and investment sentiment and thus lead to a large deterioration of Israel’s credit metrics,” Fitch Ratings wrote in a statement. 

No previous war or global economic crisis has downgraded Israel’s rating by any of the major economic rating companies. These downgrades can make future trade more difficult for Israel. 

Interest rates are at the highest they have been since the 2006 war with Lebanon.

According to a Bloomberg report, the shekel is among the world’s worst-performing currencies this month despite a $45 billion package of emergency measures. 

Two days after the start of the current war, on 9 October, the Bank of Israel sold off $30 billion in foreign reserves in an attempt to prevent the currency from further falling under the dollar. 

This increasing economic decline is an addition to the already faulty economy.

October 20, 2023 - Posted by | Economics, Militarism | , ,

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