Israel’s economy shrinks nearly 20 percent amid Gaza war

Israel’s economy shrank by nearly 20 percent on an annualised basis in the last quarter of 2023, as significant resources were diverted to its military engagement in the war in Gaza, the Financial Times reported.

According to the FT, the significant downturn was partially due to mobilising 300,000 reservists, who abandoned their jobs and businesses for extended military duty.

Other factors involved the government funding housing for over 120,000 Israelis who left Israel’s northern and southern border regions.

Following 7 October Hamas-led attacks, Israel implemented stringent controls on the entry of Palestinian workers from the West Bank, affecting the construction industry due to labour shortages, which further hurt economic growth, the FT reported.