Israel’s Economy Registers Negative Growth, for First Time in Five Years

The summer’s war against Hamas; a massive drop in foreign tourism and less investment in residential construction blamed for .4% contraction in third quarter

Moti Bassok
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A construction site in Tel Aviv during storm.Credit: David Bachar
Moti Bassok

In the third quarter of the year, the months from July through September – which included the period of fighting between Israel and Hamas and its allies in Gaza – the economy actually contracted by 0.4%, after growing by 2.2% in the second quarter and 3.2% in the first quarter of 2014, the Central Bureau of Statistics reported on Sunday.

Business output also dropped in the third quarter, by 1.4%. Data released by the CBS also show that investment in residential construction declined in the third quarter by 2.1%. This followed a 2.3% decline in the second quarter and a 2% drop in the first quarter of 2014.

Imports of goods and services increased in the third quarter by 6.2%, after slumping 4.5% during the prior three months. Investment in residences, equipment and vehicles used by businesses fell by 3.6%, following a 4.8% drop in the prior quarter. Exports of goods and services dropped by 4.4%, driven by a 77.5% fall in foreign tourist spending, which is categorized as part of Israel’s export sector.

Finance Minister Yair Lapid.Credit: Pool