Israel's Economic Growth Stalls Amid Ongoing Conflict

Israel's economic growth slowed significantly in the second quarter due to the ongoing war in Gaza. The GDP rose by just 0.3% annualized, down from earlier estimates. The conflict has contributed to inflation and possible interest rate hikes, though consumer spending has supported the economy somewhat.

Israel's economic momentum has hit a roadblock as the ongoing conflict in Gaza continues to adversely impact the country's growth. Fresh data released on Tuesday by the Central Bureau of Statistics underscores a troubling slowdown.

The economy expanded by an annualized 0.3% in the April to June period, a substantial drop from the previously reported 0.7%, and significantly lower than the initial 1.2% projected in August. This deceleration comes despite gains in consumer and government spending, as well as investments in fixed assets, while exports saw a decline.

With the specter of war weighing heavily on growth, Israel's central bank has adjusted its economic forecast for 2024 downward to 0.5% growth from an earlier estimate of 1.5%. Furthermore, officials warn of potential interest rate hikes amid spiking inflation, although rates have been held steady as of last week for the sixth consecutive meeting.

(With inputs from agencies.)