War’s damage to Israel’s economy not as dramatic as initially feared

October 1, 2006 - 3:55 PM by

As we head into Yom Kippur, some relatively pleasant news:

JERUSALEM, Sept 28 (Reuters) – The damage to Israel’s economy from a one-month war this summer between Israel and Hizbollah guerrillas appears to be less than initially feared.

A spate of economic indicators from July and August — the months affected by the conflict — showed that growth did not suffer that much, with the exception of tourism, thanks to resiliency in factory output and consumer spending.

“The data we see right now confirms…the effects of the war were temporary and relatively mild,” said Eldad Shidlovsky, acting head of economic research at the Finance Ministry.

As part of the war that ended on Aug. 14, Hizbollah fired some 4,000 rockets into northern Israel from southern Lebanon, forcing many of the region’s 1,800 factories to close or sharply scale back activity.

Tourism during the peak summer season was badly damaged, sliding 25 percent in July and 37 percent in August from the prior year, while farmers were also hit with large losses. Tourism for the first eight months of 2006 was still up 5 percent over the same period a year ago.

Economists estimated the total economic cost from the war at nearly 15 billion shekels ($3.5 billion) and had reduced 2006 growth forecasts to around 4 percent from above 5 percent.

Over recent days, however, economists have once again revised estimates to around 4.5 percent.

“Hard economic data from July and August…increasingly suggest that the economy proved more resilient to the conflict than initially feared,” Jean-Francois Mercier, an analyst at Citigroup, wrote in a report.

Hat tip: Dave Bender

To all those readers who celebrate Yom Kippur: Best wishes for a meaningful day and an easy fast.

Tags: • Category: Business 

Comments

One Comment on War’s damage to Israel’s economy not as dramatic as initially feared

  1. David on Sun, Oct 1st 2006 4:34 PM

    2. “The economy” does not exist. Israel is a political not an economic entity – regardless what the various collectivists insist on.

    Economuc pertains to the individual. Ask the individual business owners and employees what a month of wrecked economic activity has caused.

    It is termed a loss and cannot be regained. This is reality.

    So regardless what “averages” declare by comparing a non-existent “whole” or collective.

    PEOPLE were hard hit, as war always does. The degree of loss merely panacea at best.

    The Finance Ministry declares the effects as mild? They were not affected. They have automatic right to the money earned. They merely spend it.

    Socialism in Israel remains one of the most unjust and immoral ideologies hanging on from the days when we did not realize any better.

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