Israel’s economy shrank by far more than expected in the wake of conflict with Hamas in Gaza, according to official figures.
Gross domestic product (GDP) – a key measure of a country’s economic health – fell by 19% on an annualised basis in the fourth quarter of 2023.
That is the equivalent of a fall of 5% between October and December.
GDP was “directly affected” by the outbreak of the conflict on 7 October, the Central Bureau of Statistics said.
Israel and Hamas have been at war after gunmen from the Palestinian group launched an unprecedented attack on Israel from Gaza – the deadliest in Israel’s history.
About 1,200 people were killed during the attack. Hamas, which is considered a terrorist group by Israel, the US, the European Union and the UK, also took more than 250 men, women and children hostage.
An Israeli military campaign has followed, which has killed 29,000 people in the Palestinian territory, according to the Hamas-run health ministry there.
Experts said the data released on Monday by Israel’s Central Bureau of Statistics was much worse than had been expected.
The median estimate in a Bloomberg survey of analysts was for an annualised decline of 10.5%.
The Central Bureau of Statistics said the war had sharply curtailed spending, travel and investment at the end of last year.
It said private spending dropped by 26.3%, exports fell by 18.3% and there had been a 67.8% slide in investment in fixed assets, especially in residential buildings. The construction sector suffered from a lack of labour, due to military call-ups and a reduction in Palestinian workers.
Meanwhile, government spending, mainly on war expenses and compensating businesses and households, jumped by 88.1%.
Despite the sharp drop in GDP between October and December, Israel’s economy grew by 2% for the full year.
However, before the 7 October attacks, it had been expected to expand by 3.5%.
Liam Peach, emerging markets economist at Capital Economics, said the contraction of Israel’s economy was “much worse than had been expected and highlights the extent of the hit from the Hamas attacks and the war in Gaza”.
He said the country’s growth outlook for 2024 “now looks likely to post one of its weakest rates on record”.
Elsewhere, the conflict has affected trade. Houthi rebels, backed by Iran, have been targeting cargo ships on the Red Sea that are heading to the Suez Canal.
Egypt’s President Abdel Fattah al-Sisi said on Monday that the attacks had cut Suez Canal revenue by between 40% and 50% this year.
The Red Sea is one of the world’s most important routes for cargo – almost 15% of global seaborne trade usually passes through the area.
The Houthis have been carrying out strikes from bases in Yemen on ships which they claim are Israeli-owned, flagged or operated, or are heading to Israeli ports. However, the owners and operators of many vessels claim they have no links with Israel at all.
The US and the UK have carried out retaliatory strikes on Houthi targets in Yemen in turn.
But even before this, some of the world’s largest shipping companies had stopped their vessels from passing through the strait.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
OTTAWA – Finance Minister Chrystia Freeland says the government is making some changes to mortgage rules to help more Canadians to purchase their first home.
She says the changes will come into force in December and better reflect the housing market.
The price cap for insured mortgages will be boosted for the first time since 2012, moving to $1.5 million from $1 million, to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
On Aug. 1 eligibility for the 30-year amortization was changed to include first-time buyers purchasing a newly-built home.
Justice Minister Arif Virani is also releasing drafts for a bill of rights for renters as well as one for homebuyers, both of which the government promised five months ago.
Virani says the government intends to work with provinces to prevent practices like renovictions, where landowners evict tenants and make minimal renovations and then seek higher rents.
The government touts today’s announced measures as the “boldest mortgage reforms in decades,” and it comes after a year of criticism over high housing costs.
The Liberals have been slumping in the polls for months, including among younger adults who say not being able to afford a house is one of their key concerns.
This report by The Canadian Press was first published Sept. 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales rose 1.4 per cent to $71 billion in July, helped by higher sales in the petroleum and coal and chemical product subsectors.
The increase followed a 1.7 per cent decrease in June.
The agency says sales in the petroleum and coal product subsector gained 6.7 per cent to total $8.6 billion in July as most refineries sold more, helped by higher prices and demand.
Chemical product sales rose 5.3 per cent to $5.6 billion in July, boosted by increased sales of pharmaceutical and medicine products.
Sales of wood products fell 4.8 per cent for the month to $2.9 billion, the lowest level since May 2023.
In constant dollar terms, overall manufacturing sales rose 0.9 per cent in July.
This report by The Canadian Press was first published Sept. 16, 2024.
