Israeli Economy Struggles under Weight of Gaza War

People walk near high-rise buildings in the high-tech business area of Tel Aviv, Israel May 15, 2017. (Reuters)
People walk near high-rise buildings in the high-tech business area of Tel Aviv, Israel May 15, 2017. (Reuters)
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Israeli Economy Struggles under Weight of Gaza War

People walk near high-rise buildings in the high-tech business area of Tel Aviv, Israel May 15, 2017. (Reuters)
People walk near high-rise buildings in the high-tech business area of Tel Aviv, Israel May 15, 2017. (Reuters)

Nearly a year of war in Gaza has battered Israel's economy, and poverty is now threatening communities including in areas far removed from the fighting against Hamas.

Mass protests against Prime Minister Benjamin Netanyahu's controversial judicial reforms had already weakened Israel's economy prior to the Hamas attack on October 7.

But it was dealt a major blow by the impact of the worst attack in its history, and the war that has followed.

"The Israeli economy may be solid, but it is struggling to withstand this war that has lasted too long," said economist Jacques Bendelac, who warned of possible recession should fighting persist.

After shrinking by 21 percent in the fourth quarter of 2023, Israeli GDP rebounded by 14 percent in the first three months of 2024, according to official data.

But growth then turned sluggish in the second quarter at 0.7 percent.

The three main ratings agencies have downgraded Israel's debt.

Fitch predicted in August that the Gaza war -- already the longest since the war that led to Israel's creation -- could stretch into 2025.

"There are risks of it broadening to other fronts," Fitch said.

The focus of the war has in recent days shifted to northern Israel, with Hamas ally Hezbollah battling Israeli forces across the border.

Israel's credit ratings remain high, but top officials have nevertheless blasted the agencies' moves.

Netanyahu has insisted that the economy is "stable and solid" and will improve when the war ends.

- Projects on pause -

Israel's two main growth drivers are tech, which is relatively insulated from the war, and weapons, for which the war is a boon.

But the remaining economic engines of tourism, construction and agriculture "are dying out one after the other", said Bendelac, professor emeritus at the Hebrew University of Jerusalem.

Israel stopped issuing work permits for Palestinians after the October 7 attack, creating damaging labor shortages, according to Kav LaOved, an Israeli labor rights organization.

Before the war, some 100,000 such permits boosted manpower in the construction, agriculture and industrial sectors, with tens of thousands of Palestinians also working illegally inside Israel.

Kav LaOved says only 8,000 Palestinian workers have been exempted from the entry ban to work in factories deemed essential.

In economic hub Tel Aviv, construction work is on pause, with skyscrapers and transport projects left half-finished.

Tourism has also plummeted since October 7, with the war driving away holidaymakers and religious pilgrims.

From January to July, Israel welcomed 500,000 tourists -- a quarter of the number for the same period the previous year, the tourism ministry said.

With no clients, 47-year-old Hilik Wald gave up his job as a freelance guide in Jerusalem, which had earned him an average of 18,000 Israeli shekels ($4,755) monthly.

He now works part-time on the information desk of a train station.

For nearly six months, the father of two received government assistance to supplement his wage, but he is no longer eligible.

"I hope the war will be over soon," said Wald.

- Long war, slow rebound -

Over the past two decades, Israel grew "on credit consumption, and in crisis situations many families can no longer repay their loans", according to Bendelac.

High living costs combined with an economic slowdown will "inevitably result in an increase in poverty", he said.

Humanitarian organizations in Israel are already reporting a greater need for their services, with new faces appearing in food distribution queues.

At a shopping center parking lot in Rishon Lezion, a coastal city in central Israel, the NGO Pitchon-Lev, or "Open Heart", offers free baskets of fruit, vegetables and meat twice a week.

Since the war began "we have more than doubled our activities", said founder Eli Cohen, noting that the organization supports nearly 200,000 families nationwide.

New beneficiaries include "young people, families whose husbands are reservists, many people who were former donors and all those who were evacuated from their homes", Cohen said of those displaced by border clashes between Israel and Lebanon-based Hezbollah.

As for recovery prospects, Bendelac said "there is always a very strong restart of the economy" whenever war ends.

But, he added, "the longer this war lasts, the slower and more difficult the restart will be".



World Food Prices Dip in October, but Remain Higher Than a Year Ago

A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
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World Food Prices Dip in October, but Remain Higher Than a Year Ago

A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)

World food prices edged lower in October as weaker import demand contributed to monthly declines in cereal, dairy and meat prices, but were still nearly 6% higher than a year earlier, the United Nations' Food and Agriculture Organization said on Friday.

The FAO Food Price Index, which tracks monthly changes in international prices for a basket of food commodities, ‌averaged 133.9 points ‌in October, down from a revised ‌135.6 ⁠in September.

The index ⁠was 5.9% higher than a year earlier, but remained 16.4% below its March 2022 peak.

FAO's cereal price index fell 4.5% from September and was 12.6% lower than a year ago, as wheat and maize quotations declined. Wheat prices eased on weak import demand ⁠and improved production prospects, especially in Argentina.

"Expectations of ‌easing constraints on Black ‌Sea export flows added to the downward pressure on prices, ‌although continued disruptions to Black Sea logistics limited the decline," ‌FAO said in a statement.

Maize prices also eased after reaching a three-year high in September, pressured by the US harvest, expectations of ample supplies in South America and renewed ‌prospects of easing tensions in the Black Sea region.

Vegetable oil prices edged up 0.3%, ⁠as ⁠higher soybean and sunflower oil prices more than offset a fall in rapeseed oil prices.

Sugar prices rose 6.6%, their fourth straight monthly increase, to the highest level since December 2024, after rainfall disrupted harvesting in Brazil. They were now 28.8% above a year ago.

The dairy index fell 1.1%, as lower butter and cheese prices linked to ample supplies and subdued demand outweighed gains in milk powder.

The meat index declined 1.2%, while still slightly above its year-earlier level, as ovine and bovine meat prices fell.


Copper Falls, Set for Worst Week Since March on AI Rout

Copper at the Aurubis copper smelting and refining plant in Hamburg, Germany. (Reuters)
Copper at the Aurubis copper smelting and refining plant in Hamburg, Germany. (Reuters)
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Copper Falls, Set for Worst Week Since March on AI Rout

Copper at the Aurubis copper smelting and refining plant in Hamburg, Germany. (Reuters)
Copper at the Aurubis copper smelting and refining plant in Hamburg, Germany. (Reuters)

Copper dropped on Friday and was set for its biggest weekly drop in London since March, as a rout in technology stocks battered markets.

Benchmark three-month copper on the London Metal Exchange was down 1.3% at $13,663 a metric ton by 0700 GMT. That placed it on track to fall 3.44% in the week, Reuters said.

The most-traded copper contract on the Shanghai Futures Exchange fell 1.08% to 106,830 yuan ($16,018.17) a ton.

The weakness reflects worries over AI investment, ‌with copper increasingly ‌influenced by "sentiment towards data center expansion," said ‌Craig ⁠Lang, principal analyst ⁠at CRU.

Technology shares were battered after Democratic wins in the US midterms fueled concerns that new regulatory oversight could cap the AI buildout.

On the other hand, supply constraints cushioned copper's decline.

"I would be cautious about calling this a sustained correction, given ongoing mine supply challenges and exceptionally tight ⁠metal availability outside the US," Lang said.

Copper stocks ‌in SHFE-monitored warehouses <CU-STX-SGH> fell by ‌over 24% this week to just 33,848 tons — the lowest ‌in almost three years. The closely watched Yangshan copper ‌premium <SMM-CUYP-CN>, a gauge of appetite for imports into key consumer China, increased to $210 a ton on Thursday, matching its record high.

Smelters in the country are facing a double squeeze of negative treatment ‌charges and lower sulfuric acid prices.

Meanwhile, warehouse inventories outside the US have been drawn ⁠down as ⁠material was pulled into the country ahead of a potential tariff on imports of refined copper.

"These physical constraints should provide some support against weaker investor sentiment," Lang said.

Among LME metals, aluminium lost 0.54%, zinc lost 1.42%, lead lost 0.45%, nickel dipped 0.23% and tin gained 0.83%.

On the SHFE, aluminium nudged down only 0.04%, zinc lost 1.35%, lead was little changed, down only 0.03%, nickel rose 2.14% and tin dropped 3.45%.

SHFE inventories were down across the board this week, led by sharp drops in aluminium <AL-STX-SGH> and lead <PB-STX-SGH>.


Emerging Economies Set to Match Advanced Nations’ Renewable Capacity Additions, IEA Says

Workers walk at Kalyon Karapinar solar power plant in Karapinar, Konya province, Türkiye, Oct. 14, 2026. (AP)
Workers walk at Kalyon Karapinar solar power plant in Karapinar, Konya province, Türkiye, Oct. 14, 2026. (AP)
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Emerging Economies Set to Match Advanced Nations’ Renewable Capacity Additions, IEA Says

Workers walk at Kalyon Karapinar solar power plant in Karapinar, Konya province, Türkiye, Oct. 14, 2026. (AP)
Workers walk at Kalyon Karapinar solar power plant in Karapinar, Konya province, Türkiye, Oct. 14, 2026. (AP)

Emerging ‌and developing economies outside China are expected to add as much new renewable energy capacity as advanced economies for the first time over the next five years, driven by the current energy crisis, the International Energy Agency said on Friday.

Gas and oil prices have soared this year as the US-Iran war disrupts traffic through the Strait of Hormuz, a key route for global oil and gas trade.

Global renewable energy ‌capacity is forecast ‌to increase by almost 4,800 gigawatts ‌between ⁠2026 and 2031, ⁠the IEA said in its annual outlook.

Emerging and developing economies are expected to add about 1,100 GW, roughly the same as advanced economies, with China adding around 2,550 GW, the agency said.

Capacity growth in Southeast Asia, Africa and the Middle East is ⁠expected to triple over the period, ‌led mainly by solar installations, ‌the IEA said.

China will remain the biggest contributor to ‌global renewable energy growth, although its share is ‌forecast to fall to 53% by 2031 from 60% in 2025.

India is emerging as the world's second-fastest deployer of renewables and is expected to more than double its contribution ‌to global growth by 2031 to nearly 8.5%.

Grid connection delays remain ⁠a major ⁠challenge, with projects awaiting connections worldwide rising 60% over the past year, equivalent to four times the wind and solar capacity connected to grids during the same period.

Grid constraints are expected to slow growth in advanced economies, with annual additions in Europe through 2031 forecast to remain broadly in line with 2025 levels.

Renewable energy is expected to meet 6% of global transport energy demand by 2031, while higher fuel-blending mandates prompted the IEA to raise its biofuels forecast by 40% from last year's report.