Israeli Year in Review: Shattered Perceptions and Economic Realities

The past Hebrew year, ending with Rosh Hashanah תשפ"ז (September 2024), has been characterized by the collapse of long-held assumptions across political, diplomatic, and security spheres, according to the article. It draws parallels to September 11, 2001, which shattered the perception of American isolationism, suggesting that the US war in Iran, influenced by Prime Minister Netanyahu's counsel to then-President Trump, similarly failed to achieve its intended outcomes. The article criticizes Netanyahu's attempts to portray these events as successes, including his pursuit of an Israel Prize for Trump, who ultimately did not attend the ceremony.

A significant shift highlighted is the definitive end of the perception that "Hamas is an asset," a notion that collapsed on October 7th. Despite Prime Minister Netanyahu's efforts to reframe the narrative through media, the article contends that the elimination of Hamas leaders has resulted in a more extreme and vengeful leadership. The author dismisses claims that the attack on Iran has altered the Middle East landscape or diminished the nuclear threat, and disputes the assertion of eliminating key figures, stating that more radical leaders have emerged.

Economically, the year saw the debunking of the belief that housing prices could not fall. Data from the Central Bureau of Statistics indicates a 1.5% average decrease in housing prices since Rosh Hashanah תשפ"ו, with new apartments seeing a 2% drop. Despite this, rental prices have risen by 4.8% over the past year, particularly for new tenants, as potential buyers remain hesitant due to high prices and uncertainty. The Bank of Israel governor has urged developers to lower prices further.

The stock market also defied expectations. Contrary to the belief that the market had peaked, especially amidst security tensions and missile attacks, the TA-35 index surged by 41% from Rosh Hashanah תשפ"ו to early the following week. This occurred despite a significant missile barrage on Israel, the cessation of flights by most foreign airlines, and citizens seeking shelter in protected rooms.

Furthermore, the perception of Bank of Israel Governor Prof. Amir Yaron as overly conservative and incapable of lowering interest rates was proven false. Interest rates have been reduced five times since the previous Rosh Hashanah, from 4.5% to the current 3.25%. The article suggests that low interest rates are a significant driver of the stock market's performance. Looking ahead, the article anticipates a more challenging year תשפ"ז for citizens, with potential tax increases, including a possible VAT hike or the reinstatement of taxes on sweetened beverages and disposable items, as indicated by the governor's statement that "there are no free lunches."