Leumi Slashes Estimate for Israeli Economic Growth in 2014

The bank now predicts only 2.2% growth, stung by the Gaza war and a dull world economy.

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Haifa port. A  decline in exports helped drive down the GDP in the second half of 2013.
Haifa Port. War isn't good for exports. Credit: Bloomberg

Bank Leumi has cut its forecast for Israeli economic growth this year by 0.5 percentage point to 2.2%, citing slackening growth in the first half and the impact of the 50-day Gaza offensive.

The bank on Thursday cited deteriorating consumer and business confidence and said the shaky security situation would probably have a drag on the economy next year as well, stinging exports and tourism.

As a result, Leumi predicted that gross domestic product would grow 3.6% next year, down from an earlier estimate of 3.8%. Unemployment would rise to 6.4% next year from an average of 6.1% in 2014.

Leumi said the Bank of Israel announced a cut in its base lending rate this week out of concern that the economy wouldn’t recover as quickly from Operation Protective Edge as it did after the Second Lebanon War in 2006. The bank cited a more tepid global economic environment.

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