Finance & economics | Financial conflict

Can Israel’s economy survive an all-out war with Hizbullah?

The country’s banks are experiencing capital flight

An Israeli soldier walks past a group of young Muslim men in the old city of Jerusalem
Photograph: Getty Images

Israel’s economy should have been trundling towards recovery. After all, many of the 300,000 workers who left their jobs to fight have now returned to offices, factories and farms. Instead, a difficult situation is becoming more difficult still. GDP growth came to just 0.7%, on an annualised basis, between April and June, some 5.2 percentage points below economists’ expectations, according to Bloomberg, a news agency. On September 16th Bezalel Smotrich, Israel’s finance minister, had to ask legislators to approve an emergency deficit increase. It was the second time he had made such a request this year.

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This article appeared in the Finance & economics section of the print edition under the headline “On a knife edge”

From the September 28th 2024 edition

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