From the Liveblog of
Tuesday, October 29, 2024
Finance Ministry slashes growth outlook for 2024 and 2025 as war expands
Sharon Wrobel is a tech reporter for The Times of Israel.
The Finance Ministry slashes its growth outlook for this year and next year, citing the intensity of the ongoing war and expansion of the fighting with the Iran-backed Hezbollah terror group in the north.
The Finance Ministry’s chief economist revises the Treasury’s growth projections ahead of the discussions for the passage of the 2025 state budget starting on Thursday. The Treasury says it now expects the economy to expand by a mere 0.4 percent in 2024 and 4.3% in 2025. That is down from a September forecast of 1.1% for 2024 and 4.6% for 2025.
“Our forecast in early September was based on a scenario of a continuation of the fighting until the first quarter of 2025, and did not assume further intensity of the fighting or an expansion to other fronts,” the Finance Ministry says. “This scenario is no longer relevant since the fighting expanded to the northern arena at the end of September.”
“Our current baseline scenario assumes a continuation of intense fighting during most of the last quarter of 2024, including increased reserves recruitment and a slowdown in the scope of reserves callups after that and throughout 2025.”
Earlier this month, the Bank of Israel lowered its growth projection for the economy to 0.5% in 2024 and 3.8% in 2025. That forecast was revised from a previous estimate in July of 1.5% in 2024 and 4.2% in 2025, when the central bank assumed that intense fighting with Hamas would abate by the end of the year.
