Israel’s Economy Expected to Shrink 2% as War Sidelines Workers

The Israeli economy is expected to shrink by 2 percent this quarter, according to a leading research center, with hundreds of thousands of workers displaced by the war with Hamas or called up as reservists.

About 20 percent of the Israeli work force was missing from the labor market in October, up from 3 percent before the fighting began, according to a report from the Taub Center for Social Policy Studies, a nonpartisan think tank in Israel.

The spike in unemployment reflects the fact that about 900,000 people were called up to fight, stayed home to take care of children because schools had closed, evacuated from towns near the borders with Lebanon and Gaza or couldn’t work because of physical damage to their industries.

Since October, some students have been able to return to school, and some displaced Israelis have been able to work remotely. Still, the economic implications for such a large disruption could be significant, especially with no end to the war in sight.