Palestinian Attacks Stoke Israeli Fears of Recession

After more than two weeks of terrorist attacks, concern is rising in Israel that the weakening economy could be pushed into recession.

There are already signs that some Israelis may be pulling back from spending and tourism, accounting for seven percent of Israel’s economy, is vulnerable.

Construction could also be hit if the flow of 100,000 Palestinian laborers who enter pre-1967 Israel and communities in Yehudah and Shomron each day to work is stemmed by security blockades.

But much will depend on whether the violence is prolonged and spreads further.

“The attacks will only have an effect on the economy if they last a long time and happen in cities such as Tel Aviv, Haifa and Be’er Sheva,” Ilan Artzi, chief investment officer of brokerage Halman-Aldubi said.

“If they spread to other cities then we will see people go out less and buy less,” he said, shortly before a terror attack occurred at the central bus station in Be’er Sheva.

Downtown Yerushalayim is largely empty, and Israeli media reported credit card transactions down 11 percent nationwide from 2014. Amir Halevi, the tourism ministry’s director general, said 98 percent of tourists have remained in Israel since the current violence began, although some have avoided the capital. El Al said that so far it has not seen cancellations. Fattal and Dan hotel chains said there have been “small numbers” of cancellations in Yerushalayim. Tel Aviv and Eilat are less affected.

This article appeared in print on page 7 of the October 20th, 2015 edition of Hamodia.