Standard & Poor’s expects Israel’s economy to shrink in 2024
Agency Standard & Poor’s credit rating agency said on Monday that it expects the Israeli economy to shrink by 0.2% this year, compared to the International Monetary Fund’s forecast of 0.7% growth.
This came in a report issued by the agency on Monday, in which it said it had prepared it before the Israeli strike on Iran was carried out at dawn last Saturday, according to the Globes website, which specializes in the Israeli economy.
The website reported from the agency’s report that Israel’s war against Hamas in Gaza and recently against Hezbollah in Lebanon, in addition to the growing tensions between Iran and Israel, are increasing fears of a regional escalation of the war, which will include other countries in the region.
The report added, “The Middle East and North Africa region has dealt with a difficult economic situation in recent weeks, especially due to the escalation of conflicts in the Middle East”.
Standard & Poor’s forecasts that Israel’s GDP will shrink by 0.2% this year, “and growth will be weak at 3.2% in 2025 and 3.6% in 2026.
The fiscal deficit is expected to reach 9% of GDP this year, compared with the Israeli Finance Ministry’s forecast of 6.6%, according to Standard & Poor’s.
In 2025, the budget deficit will reach 6% of GDP and 5% in 2026; the report confirms that there may be changes due to developments in the war.
On Tuesday, the International Monetary Fund lowered its forecast for Israeli economic growth this year to just 0.7%, compared to actual growth of 2% in 2023.
Earlier this month, the Israeli Finance Ministry said the budget deficit in the 12 months ending in September was 8.5%, up from 8.3% in the months ending in August.
Israel has repeatedly turned to global debt markets to obtain the liquidity needed to finance war expenses and cover the budget deficit.
