JERUSALEM, Oct. 9 (Xinhua) -- Israel's central bank on Wednesday downgraded its growth forecasts for the Israeli economy for 2024 and 2025, citing the impact of the ongoing conflict.

According to the bank's statement, Israel's gross domestic product (GDP) is now projected to grow by just 0.5 percent in 2024 and 3.8 percent in 2025, down from previous forecasts of 1.5 percent and 4.2 percent, respectively, issued in July.

The revision was driven by lower-than-expected growth in the first half of 2024 and the economic fallout from the recent security deterioration.

The bank noted that the 2025 outlook reflects expectations of intensified fighting at the start of the next year, with a delay in the recovery of economic activity until the second half of 2025.

Labor shortages, particularly in the construction sector, are also weighing on the economy. The bank pointed to severe restrictions on the entry of Palestinian workers from the West Bank and a complete halt in labor from Gaza.

Bank of Israel Governor Amir Yaron urged, during a press briefing, that within security constraints, efforts should be made to allow Palestinian workers to return to the construction industry.

Additionally, the bank raised its inflation forecast for 2024 from 3 percent to 3.8 percent and increased the government deficit forecast from 6.6 to 7.2 percent of the GDP. Enditem

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