Bank of Israel warns of post-election risks
The Bank of Israel has warned of political and economic risks that may emerge following the Knesset elections scheduled for next Tuesday, including the possibility of an inconclusive election result, deepening social divisions, and harm to institutional independence, amid ongoing regional tensions and the potential for renewed war. The warnings were issued in the economic forecast report published by the bank's research division on Thursday.
The Bank of Israel has warned of political and economic risks that may emerge following the Knesset elections scheduled for next Tuesday, including the possibility of an inconclusive election result, deepening social divisions, and harm to institutional independence, amid ongoing regional tensions and the potential for renewed war. The warnings were issued in the economic forecast report published by the bank's research division on Thursday, which stated that its estimates did not account for the potential effects of the election results on the economy. The report pointed to risks related to an inconclusive election, deepening divisions within Israeli society, and harm to institutional independence, along with the possibility of intensified sanctions imposed by various countries on Israel. It warned that a resumption of war on a larger scale could lead to increased call-up of reserve forces, a worsening labor shortage, and higher military spending and prices, thereby hindering economic recovery. It also noted that renewed war with Iran could impact the global economy, particularly through higher energy prices. The bank expects the budget deficit to rise from 4.4% of GDP in 2026 to 4.6% in 2027.