The Gaza conflict severely hit the Israeli economy, with GDP growth expected to plummet to 1.1%

The Israeli Ministry of Finance has significantly lowered this year's GDP growth forecast to 1.1%, reflecting the significant impact of the Gaza war on the economy. The 2025 economic growth forecast has also been revised down to 4.4%. The country's credit rating has experienced a historic downgrade, bond yields have risen, and investor sentiment is tense. It is estimated that war-related expenses could reach $66 billion, accounting for over 12% of GDP. Fitch Ratings has downgraded Israel's debt rating to A, forecasting a fiscal deficit of 7.8% of GDP. Despite the economic slowdown, the central bank may maintain the benchmark interest rate at 4.5%