(Bloomberg) -- Israel's economic expansion in the first half of 2020 could suffer if the country remains mired in political deadlock and heads to its third elections in less than a year, according to economists at one of the country's largest banks.
Read more: Israel Has Lost a Year to Chaos at the Top of Government
After two back-to-back votes led to a stalemate between Prime Minister Benjamin Netanyahu and his top opponent, former military chief Benny Gantz, the country has until midnight Wednesday before parliament is dissolved and new elections are called for early next year.
A year of uncertainty has taken its toll on the country's international ties and domestic agenda, including passing a new budget to stem the widening deficit.
Political Woes Delay Israeli Budget Planning Past Start of 2020
“The chances for a third round of elections rose, and that is not good news for markets,” Bank Hapoalim Ltd.'s economic department said in a note. “We assume therefore that we will see some slowdown in growth in the first half of 2020.” It didn't give a growth projection.
The Bank of Israel forecasts the economy will expand 3.1% this year, and 3% in 2020.
Israel's 12-month trailing budget deficit stood at 3.7% of gross domestic product in November, above the 2.9% target. With March elections, that means the Finance Ministry will have to operate without an approved budget for half a year, and that will freeze vital expenses and the budget deficit will remain at a high level, the economists wrote.
To contact the reporter on this story: Ivan Levingston in Tel Aviv at ilevingston@bloomberg.net
To contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, James Amott, Amy Teibel
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