Israel's economy grew by an annualized 1.2% in the second quarter of 2024, falling short of the expected 4.4% and continuing a trend of volatility since the onset of the Gaza conflict. Per capita GDP declined by 0.4%, despite a significant rise in consumer spending (12%) and government spending (8.2%), which were unable to fully offset an 8.3% drop in exports. Following a strong recovery in the first quarter, where GDP grew by 17.3%, the ongoing war has severely impacted national output, particularly in sectors reliant on Palestinian labor. The inflation rate rose to 3.2% in July, exceeding the government's target, which may influence future monetary policy decisions by the Bank of Israel. Economic analysts suggest that recovery is hindered primarily by supply-side issues rather than demand. The central bank's next interest rate decision is scheduled for August 28, 2024.