Israeli leaders like to congratulate themselves these days on having come out of the world financial crisis only slightly and briefly scratched. GDP growth declined from 4% in 2008 to 0.7% in 2009, but in 2010 it is expected to rise to close to 4%. Unemployment increased from 5.7% in 2007 to 8.0% in 2009, but declined to 6.3% by mid-2010.
Self-congratulation is based on the claim, that the measures taken in the years 2001-2003 helped soften the impact of the financial crisis that erupted in 2008 as well as to shorten its duration.
What happened in 2001-2003 in Israel? First there was the burst of the world-wide hi tech bubble – a crisis that did not last long - and then the Second Palestinian Intifada, which lasted longer and had a much more profound effect on Israeli economy and society (as well as on the Palestinian side): there were two years (2001 and 2002) of negative GDP growth and three years (2001-2003) of negative growth in GDP per capita.
What happened in 2001-2003 is a perfect example of Israel's double economic jeopardy: like all other countries, it is exposed to the danger of world-wide economic crises, such as the present one; in addition, it is exposed to the danger of economic crises that are due to political violence, such as Palestinian uprisings against the continued Israeli occupation.