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business1d ago
Israel's central bank chief pins hopes on peace as economic shock looms
- Israel's economy faces shocks from Middle East conflicts, but policymakers remain hopeful for a rebound if the wars end.
- Amir Yaron says there is “huge uncertainty” about how long the conflict will last, affecting growth projections.
- Yaron expects growth could rebound to about 5.5% in 2027 if conflicts de-escalate and oil stabilizes.
- The Bank of Israel kept rates steady, signaling potential cuts next year if the war ends and conditions improve.
- Defense and technology sectors remain a bright spot with high order backlogs for defense products.
- Yaron says de-escalation would ease geopolitical risk and boost growth and labor supply as reservists return.
- Inflation forecasts remain challenging amid ongoing uncertainty around the Middle East situation.
- The 10-day ceasefire followed talks in Washington, with broader implications for regional risk.
- Yaron emphasized the economy’s resiliency and dynamism despite years of conflict since Oct. 7, 2023.
- Overall outlook hinges on whether the war ends and energy prices ease to enable monetary easing.
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