Israel's losses expand as a result of the war (Al Jazeera)

The budget deficit in Israel continued to expand during the month of February, reaching 5.6% of the gross domestic product for the past 12 months, or 105.3 billion shekels ($29.3 billion), according to the Israeli newspaper Globes, citing the Accountant General of the Ministry of Finance, Yali Rotenberg.

The fiscal deficit increased by 0.8% during the past month alone, amounting to 13.4 billion shekels ($3.72 billion).

Israel's amended budget for 2024 - scheduled to be approved by the Knesset (the Israeli parliament) on Wednesday - assumes that the budget deficit will remain at 6.6% for the entire year.

According to the newspaper, the Israeli Ministry of Finance expects the deficit to continue to expand in the next few months, but it will begin to decline in the last quarter of 2024 after changes related to the war on Gaza.

In a report, the newspaper expected the deficit to exceed 6.6% in the coming months, and considered it logical that the deficit would decline in the period from October to December 2024 compared to the same period in 2023, when the war broke out.

The fiscal deficit in the first two months of the current year amounted to 10.9 billion shekels ($3 billion), compared to a surplus of 16.9 billion shekels ($4.7 billion) in the corresponding period of 2023.

According to the newspaper, the Israeli budget usually records a surplus in January.

The newspaper says that in this advanced stage of the war, the deficit is mainly due to government spending, as its rate of increase since the beginning of the year reached 43.6%, while revenues declined by 0.4% in the period from January to February 2024, compared to the similar period of Year 2023.

The decrease in revenues is due to a decline in direct tax revenues, according to the newspaper.

Israel's economic losses due to the Gaza war (Al Jazeera)

shrinkage

It is noteworthy that Israel's economy contracted more in the last quarter of 2023 than previously thought, with consumer spending, exports, and investments severely affected by the war launched by Israel in the Gaza Strip.

The Israeli Central Bureau of Statistics reported yesterday, in another estimate, that the economy contracted by 20.7% on an annual basis in the last three months of 2023, after the initial estimate that had previously indicated a contraction of 19.4%.

For all of 2023, the economy grew 2%, without adjustment, compared to 6.5% in 2022.

The revised figure for the fourth quarter comes against the backdrop of significant declines in exports, private spending and investment in fixed assets, while government spending grew slightly less than previously estimated.

Source: Israeli press + Reuters