According to the Globes, the OECD determined that 1.9% growth would hurt Israel’s economy, compared to the 2% promised by the central bank.
The OECD has revealed that Israel’s economy will grow by 1.9% in 2024, compared to the pre-war forecast of 3.3%. The Israeli economy in 2025 is expected to grow by 4.6%.
The OECD report shows a discrepancy between that forecast and the Central Bank of Israel’s forecast of 2% in 2024 and 5% in 2025. The International Monetary Fund also predicts that the growth rate in 2024 will be low at 1.6%, but the growth rate in 2025 will be higher, at 5.4%.
It outlines how the Israeli economy has been negatively affected by the war, and the report further highlights the downturn in the construction sector due to the absence of foreign workers. According to the OECD, the share of new settler housing projects in the occupied territories fell by 53% in the last quarter of 2023 and is expected to only partially recover in 2024.
The document further notes that inflation in Israel has remained relatively low since reaching its peak (5.4% in January 2023), with the 2024 inflation rate expected by the Central Bank of Israel to be 2.7%. The company said it expects the increase to be 2.5%. The OECD expects inflation to continue at this level in 2025, allowing the Bank of Israel to cut interest rates to 3.75% next year (down from the current 4.5%).
Regarding fiscal policy, the report indicates that defense spending is expected to permanently increase by at least 0.5% of GDP, in addition to war-related expenses.
Lapid: The middle class is collapsing and the government must retreat.
On Tuesday, Israeli government opposition leader Yair Lapid said prices in “Israel” were rising and warned of the collapse of the middle class.
“Prices are rising and the middle class is collapsing,” Lapid said through Platform ” he added.
In this context, Israeli media reported that a wave of price hikes was imminent starting Wednesday, saying: “In addition to rising gasoline prices, which will rise again in May, the prices of government-regulated dairy products are soaring. Prices of food and detergents will increase in earnest.
A few days ago, “Israel” channel Kan He quoted a senior government finance official as saying, “If the war continues, we will have no choice but to increase taxes.”
The official confirmed that Israel’s finance ministry is considering raising taxes soon to pay for the war in Gaza.
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