TEL AVIV, Feb 17 (Reuters) - Israel's economy posted

scant growth in 2024, with the war in Gaza against Palestinian

Islamist group Hamas taking a toll on investment and exports.

Boosted mainly a spike in government spending, particularly

on the military conflicts, growth was 1% last year, down from

1.8% in 2023 but exceeding the Bank of Israel's estimate of

0.6%, the Central Bureau of Statistics said in an initial

estimate on Monday.

The war in Gaza broke out after Hamas' cross-border attack

on southern Israel in October 2023. A ceasefire came into effect

on January 19 this year. The war expanded to battling Hezbollah

in Lebanon but a ceasefire there was reached on November 27.

Oz Shimoni, head of the bureau's macroecconomics division,

said there was no single item that influenced growth data in

2024.

"It was many components," he told Reuters. "That's why it

was up 1%... The 1% increase is only because of government

expenses."

Growth also partly suffered due to a smaller workforce since

tens of thousands of residents were called up for reserve

military service.

The business sector, which excludes government spending,

fell 0.6%. On a per capita basis, GDP fell 0.3% to around

$40,000 - compared with gains of 2.1% in the United States and

0.6% in the UK and Italy.

For the fourth quarter, gross domestic product

grew by an annualised 2.5%, below a 5.7% consensus in a Reuters

poll. On a per capita basis, GDP gained 1.5% in the quarter.

The weak growth data comes after the bureau on Friday

reported that the annual inflation rate jumped to 3.8% in

January from 3.2% in December, a figure that will continue to

prevent the Bank of Israel from lowering short-term interest

rates any time soon.

In 2024, government spending led growth with a 13.7% rise,

while consumer spending rose 3.9%. Investment in fixed assets

fell 5.9% and exports dipped 5.6%.

In the fourth quarter, state spending grew 7.6%, exports

rose 6.2%, consumer spending increased 9.5% and investment

jumped 14.7%.

The Bank of Israel estimates growth of 4% in 2025 and 4.5%

in 2026.