Bank of Israel​

Bank of Israel Governor Prof. Amir Yaron delivered remarks during an online conference held at the initiative of the Association of Hedge Funds and the Tel Aviv Stock Exchange for global capital market investors. His talk was entitled: “Israel’s Economic Strength and Navigating its Dynamics During Wartime”.

"We are in the eighth week of the “Swords of Iron” War. Beyond the security issues, the war has marked economic ramifications, which impact on real activity and on the financial markets. We at the Bank of Israel and the Monetary Committee are utilizing a range of tools that are available to us in order to assist the economy and the public in Israel to get through this period and reach the optimal starting point for the day after."

The State of Israel is in the eighth week of the “Swords of Iron” war. The war is having significant economic consequences, both on real activity and on the financial markets.  Indicators of economic activity during the war point to an initial contraction of business activity, with some recent gradual recovery. 

This document presents the macroeconomic staff forecast formulated by the Bank of Israel Research Department in November 2023 concerning the main macroeconomic variables—GDP, inflation, and the interest rate. This forecast was formulated in the midst of the “Swords of Iron” War, which broke out on October 7, 2023 with the cruel attack by terrorist organizations from Gaza.

The Composite State of the Economy Index declined by 1.1 percent in October—influenced by the Swords of Iron War. The outbreak of the war on October 7 led to a sharp decline in economic activity, particularly in private consumption. The decline was reflected in a sharp decline in credit card purchases and in the import of consumer goods in October.