Israel’s economy rebounds in first quarter

People shopping at the Azrieli mall in Tel Aviv during the municipal elections, Feb. 27, 2024. Photo by Flash90.

(JNS) — Israel’s economy sharply rebounded in the first quarter of 2024 after taking a hit late last year from the war that Hamas started on Oct. 7.

According to preliminary estimates from the Central Bureau of Statistics published on May 16, gross domestic product grew at an annualized rate of 14.1 percent in the first three months of the year, after having contracted at an annualized 21.7 percent in the previous quarter (revised from a previous estimate of 21 percent).

The rebound was led by a large increase in private spending and investment, especially in the residential sector.

“The relatively sharp increase in the gross domestic product in the first quarter of 2024 reflects a significant increase in private consumption data and investment in fixed assets after large decreases in the fourth quarter of 2023, but still the private consumption data and investment in fixed assets are affected by the security situation and have not returned to the level before the outbreak of the war,” the CBS statement said.

The 14.1 percent growth rate was close to the Reuters consensus projection of 15.3 percent.

Israel’s annual inflation rate rose to 2.8 percent in April compared to 2.7 percent in March, data published on May 15 showed, above expectations of 2.5 percent, although within the government’s annual target of 1to 3 percent.

According to Reuters, the economic rebound plus the slightly higher inflation rate for April could push back Bank of Israel rate cuts, with the next interest rate decision due on May 27.

The central bank forecasts economic growth of around 2 percent in 2024 if the war is contained and winds down this year without spreading to other fronts.