Israel’s Economy Grows in 2024, Exceeding Expectations

Israel’s economy grew by 1% in 2024, surpassing initial forecasts despite ongoing military operations. According to a preliminary estimate by the Central Bureau of Statistics, the country’s GDP demonstrated resilience. However, per capita growth remained negative at -0.3% due to population increase.

Recovery in the Final Quarter

Data indicates continued recovery in the fourth quarter of 2024, with GDP growing at an annualized rate of 2.5%, following a strong 5.3% surge in the third quarter. Despite the positive trend, overall GDP levels remain below the pre-war period.

Forecasts vs. Reality

The actual economic growth outpaced projections from major economic institutions. The Ministry of Finance had forecasted a 0.4% increase, while the Bank of Israel and the OECD expected 0.6%. Moody’s anticipated 0.5%, and S\&P predicted zero growth. Final figures exceeded even the most optimistic estimates.

Business Impact

Despite overall GDP growth, key sectors of industry and business were hit hard. Industrial output declined by 0.6% in 2024. The broader economy was primarily sustained by a sharp increase in government spending. Public sector expenditures rose by 13.7%, with most of the increase driven by defense-related costs. Defense spending jumped by 43.3%, while civilian spending increased by only 4.2%.

The economic situation remains challenging, but the fact that GDP growth exceeded forecasts highlights the Israeli economy’s ability to adapt to the pressures of an ongoing conflict.