The Melnick State of the Israeli Economy Index witnessed a decline of 1.4 percent in November 2023, shedding light on the profound impact of the ongoing conflict on economic activities within the business sector. The data underscores a contraction of approximately 2.6 percent in the business sector during the initial two months of the war, with an anticipated drop in the GDP growth rate to 2.2 percent for the entire year of 2023.
In October, the revenue index for commerce and services, a crucial gauge of domestic demand and particularly private consumption, experienced a notable decrease of around 13.8 percent. This decline mirrors the severity observed during the first month of the COVID-19 shutdown, revealing the tangible economic ramifications of the ongoing geopolitical instability.
The industrial production index, indicative of the supply side of the business sector, also experienced a significant drop in October, although less pronounced than the decline in revenue. This suggests that, at this juncture, the primary detriment to the business sector originates from the demand side. The import index, largely comprising inputs for domestic production, continues to decline, signaling a pervasive pessimism regarding the future growth of economic activity.
Data still collecting
As of now, the current count of employee posts in the business sector does not yet fully account for the months directly affected by the ongoing war, adding an element of uncertainty to the overall employment landscape.
The components of the November index further elucidate the economic challenges faced by Israel during these tumultuous times. The industrial production index recorded a 5.2% decrease in October, following a 4.3% decrease in September. Likewise, the revenue in commerce and services experienced a 13.8% decrease in October, following a 3.9% decrease in September. The import index saw a decrease of 0.4% in November, after a 5.5% decrease in October.
In contrast, the number of employee posts in the business sector showed a modest 0.4% increase in September, following a 0.7% increase in August.
With these indicators in mind, the Israeli economy faces a challenging trajectory, with the ongoing conflict casting a shadow over various sectors. As stakeholders closely monitor the evolving situation, the path to economic recovery remains uncertain, requiring agile policymaking and strategic interventions to navigate these unprecedented challenges.