Business sector GDP growth in 2023 will drop to 2.2 percent
At this stage it seems that the main harm to the business sector comes from the demand side
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The Melnick State of the Israeli Economy Index declined by of 1.4 percent in November 2023. The Index underscores the significant impact on economic activity within the business sector during the initial two months of the ongoing war. The data reveals a contraction of approximately 2.6 percent in the business sector during this early phase of the conflict, leading to an anticipated drop in GDP growth to 2.2 percent for the year 2023. In October, the revenue index for commerce and services, a key indicator of domestic demand and particularly private consumption, experienced a substantial decrease of around 13.8 percent. This decline is comparable to the severity observed during the first month of the COVID-19 shutdown. The industrial production index, reflective of the supply side of the business sector, also experienced a significant drop, although less pronounced than the decline in revenue. At this juncture, it appears that 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 pessimism regarding future growth of economic activity. The current count of employee posts in the business sector does not yet account for the months directly affected by the ongoing war.
The components of the November index include: a 5.2% decrease in the industrial production index in October, after a 4.3% decrease in September; a 13.8% decrease in the revenue in commerce and services in October after a 3.9% decrease in September; a decrease of 0.4% in the import index in November, after a decrease of 5.5% in October; and a 0.4% increase in the number of employee posts in the business sector in September, after a 0.7% increase in August.
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