AhlulBayt News Agency: The Israeli regime’s economy shrank 3.5% in the April–June quarter as the recent aggression against Iran forced business closures and dampened consumer spending, exports, and investment, according to preliminary data from the Central Bureau of Statistics.
This contraction is the first quarterly drop since late 2023, when the economy plummeted 20.8% as the genocide in Gaza took a heavy toll on consumer spending, trade, and investment.
Israel’s aggression against Iran in June, sparking a 12-day war, has battered the economy and crippled vital sectors. With airspace mostly shut down and mass military call-ups draining the workforce, both businesses and civilians have faced severe disruptions.
On June 13, Israel launched an unprovoked war against Iran, assassinating dozens of high-ranking military commanders, nuclear scientists, and civilians.
On June 24, Iran succeeded in forcing a ceasefire through its retaliatory operations against the Israeli regime.
Ballistic missiles launched from Iran over the Operation True Promise III drove Israeli settlers into shelters, wrecked hundreds of buildings, and shuttered businesses—either partially or completely.
Ronen Menahem, chief markets strategist at Mizrahi Tefahot Bank, said that the preliminary economic data reflects the repercussions of the war on Iran on both business activity and consumer spending.
The GDP contraction between April and June was driven primarily by a sharp 6.2% decline in business sector productivity, according to official data.
Consumer spending dropped 4.1%, while exports (excluding startups and diamonds) fell 3.5%. Government expenditures also shrank by 1%.
“The 12 days of war with Iran had an impact on household spending, while the high interest rate and the appreciation of the shekel have also challenged the economy,” said Menahem. “It will take at least one or two quarters to ‘clean up’ the impact of the Iran war from the trend data.”
Israel’s economic growth slowed to approximately 1% last year, following 1.8% in 2023 and a stronger 6.3% in 2022 before the genocide in Gaza.
Over the past 22 months, Israel has waged its most protracted and severe onslaught to date against Gaza, engaging in aggression against Iran, Lebanon, and other regional countries.
This multi-front war has already incurred approximately NIS 300 billion ($88.7 billion) in costs, significantly escalating the regime’s borrowing and expanding the debt burden.
Earlier this month, the regime’s finance ministry revised its 2025 economic growth forecast downward from 3.6% to 3.1%, based on projections that the Gaza genocide would persist through September.
The growth projections do not account for the potential costs of the recently approved plan to occupy the densely populated Gaza City.
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