Israel's Economy Hit Hard by Conflict with Hamas in Gaza

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Israel's Economy Hit Hard by Conflict with Hamas in Gaza

During the conflict with Hamas, about 1,200 individuals lost their lives, and Hamas also held over 250 hostages, leading to a military campaign by Israel that resulted in thousands of deaths in the Palestinian territory. The economic repercussions were substantial, with significant decreases in private spending, exports, and investment in fixed assets, particularly in residential buildings. The construction sector suffered due to military call-ups and a reduction in Palestinian workers.

According to Liam Peach, an economist at Capital Economics, the economic contraction in Israel exceeded expectations, reflecting the severe impact of the Hamas attacks and the subsequent war in Gaza. As a result, Israel's growth prospects for 2024 are now expected to be among the weakest in its history. The conflict also had wider implications on trade, as Houthi rebels in Yemen, supported by Iran, targeted cargo ships in the Red Sea en route to the Suez Canal, a vital trade route for global seaborne trade. The attacks on vessels, which the rebels claimed were linked to Israel, led to disruptions even for ships not associated with Israel, causing major shipping companies to seek alternative routes.