Israel's economy grew less than expected in the second quarter of this year amid the volatility caused by the war in Gaza.
The country’s gross domestic product expanded by 1.2 per cent in the April-June period, the Central Bureau of Statistics said in an initial estimate on Sunday.
It was below the consensus forecast of 4.4 per cent and the 3 per cent growth estimate from the online platform Trading Economics.
On a per capita basis, Israel’s GDP fell 0.4 per cent in the quarter.
The overall growth was primarily driven by a rise in consumer spending by 12 per cent, investment in fixed assets by 1.1 per cent and government spending by 8.2 per cent, which offset an 8.3 per cent decline in exports.
Israel's economy grew at an annual rate of 2.5 per cent during the first half of this year, compared to 4.5 per cent during the same period last year, the data showed.
The war in Gaza began when Hamas attacked southern Israel on October 7, killing about 1,200 people and taking about 240 hostages.
Israel's retaliation has continued since then, with more than 40,000 Palestinians killed, 90 per cent of the enclave's 2.3 million people displaced and the economy of the Palestinian territories ravaged.
Calls for a ceasefire and hostage release deal have intensified amid fears Iran could launch a retaliatory strike against Israel at any moment following the assassinations of Hezbollah and Hamas leaders.
The likelihood of a full-scale regional conflict increased following the recent assassinations of Hamas leader Ismail Haniyeh in Tehran and senior Hezbollah military commander Fouad Shukr in Beirut.
Iran has threatened “harsh punishment” for Israel, which Tehran has blamed for the Hamas leader's killing.
Last week, Israel’s credit rating was downgraded by Fitch Ratings, which cited concerns around the continuing war and geopolitical risks.
Fitch maintained a negative outlook on the country's credit, indicating the possibility of a future downgrade, after lowering the credit rating from “A+” to “A.”
The agency has projected a budget deficit of 7.8 per cent of GDP in 2024 and expects debt to remain above 70 per cent of GDP in the medium term.
"In our view, the conflict in Gaza could last well into 2025 and there are risks of it broadening to other fronts," Fitch said.
"In addition to human losses, it could result in significant additional military spending, destruction of infrastructure and more sustained damage to economic activity and investment, leading to a further deterioration of Israel's credit metrics," the agency added.
In July, the Bank of Israel lowered the country’s growth forecast from its April projections due to the impact of the war in Gaza, noting that there is still a “long way to go” before the economy returns to normal.
The Israeli economy is expected to grow by 1.5 per cent this year and 4.2 per cent next year, with the central bank's projections cumulatively 1.3 percentage points lower than the April forecast.
In its earlier estimate, the Israeli banking regulator said the estimated cost of the conflict for the period between 2023 to 2025 stands at about 255 billion shekels or 13 per cent of the 2024 forecast GDP, which includes both higher defence and civilian spending, as well as lower tax revenue.
Last month, the International Monetary Fund cut its expansion forecast for Middle Eastern economies on the back of oil production caps and the Israel-Gaza war.
The world economy, which showed resilience last year, is in a “sticky spot” with the slowing pace of disinflation and prospects of a higher-for-longer interest rates regime looming large, the Washington-based fund said in the latest update of its World Economic Outlook.
The IMF maintained its global growth projection for this year at 3.2 per cent and expects the world economy to expand at a slightly faster pace of 3.3 per cent next year.
Quick pearls of wisdom
Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”
Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.”
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ETFs explained
Exhchange traded funds are bought and sold like shares, but operate as index-tracking funds, passively following their chosen indices, such as the S&P 500, FTSE 100 and the FTSE All World, plus a vast range of smaller exchanges and commodities, such as gold, silver, copper sugar, coffee and oil.
ETFs have zero upfront fees and annual charges as low as 0.07 per cent a year, which means you get to keep more of your returns, as actively managed funds can charge as much as 1.5 per cent a year.
There are thousands to choose from, with the five biggest providers BlackRock’s iShares range, Vanguard, State Street Global Advisors SPDR ETFs, Deutsche Bank AWM X-trackers and Invesco PowerShares.
Breast cancer in men: the facts
1) Breast cancer is men is rare but can develop rapidly. It usually occurs in those over the ages of 60, but can occasionally affect younger men.
2) Symptoms can include a lump, discharge, swollen glands or a rash.
3) People with a history of cancer in the family can be more susceptible.
4) Treatments include surgery and chemotherapy but early diagnosis is the key.
5) Anyone concerned is urged to contact their doctor
Jeff Buckley: From Hallelujah To The Last Goodbye
By Dave Lory with Jim Irvin
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The biog
Title: General Practitioner with a speciality in cardiology
Previous jobs: Worked in well-known hospitals Jaslok and Breach Candy in Mumbai, India
Education: Medical degree from the Government Medical College in Nagpur
How it all began: opened his first clinic in Ajman in 1993
Family: a 90-year-old mother, wife and two daughters
Remembers a time when medicines from India were purchased per kilo
Mohammed bin Zayed Majlis
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
German intelligence warnings
- 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
- 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
- 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250
Source: Federal Office for the Protection of the Constitution
The five pillars of Islam
The story in numbers
18
This is how many recognised sects Lebanon is home to, along with about four million citizens
450,000
More than this many Palestinian refugees are registered with UNRWA in Lebanon, with about 45 per cent of them living in the country’s 12 refugee camps
1.5 million
There are just under 1 million Syrian refugees registered with the UN, although the government puts the figure upwards of 1.5m
73
The percentage of stateless people in Lebanon, who are not of Palestinian origin, born to a Lebanese mother, according to a 2012-2013 study by human rights organisation Frontiers Ruwad Association
18,000
The number of marriages recorded between Lebanese women and foreigners between the years 1995 and 2008, according to a 2009 study backed by the UN Development Programme
77,400
The number of people believed to be affected by the current nationality law, according to the 2009 UN study
4,926
This is how many Lebanese-Palestinian households there were in Lebanon in 2016, according to a census by the Lebanese-Palestinian dialogue committee
