Israel’s economy has recorded an average annual growth rate of about 4% since the trough of 2002. So this week’s announcement that GDP had dipped to 1.7% – which after allowing for population changes means zero change in reality – is a real shocker. The concern has led the Bank of Israel to slice unexpectedly its interest rate down to a historic low of 0.25%.

Many analysts are questioning if the bubble has burst.

The Economist has focused on the damage caused by a strong shekel and its impact on exports. The BBC has examined how the war with Gaza is devastated parts of Israel’s blossoming tourism sector. There was always going to be a tremendous strain juggling the demands on the 2015 budget,  as the Minister of Finance is refusing to raise taxes (for now).

As one commentator surmised, Israel’s economic star may be waning.

The pressures are immense. The military needs money to replenish its arsenal and pay for the 80,000 reservists called up. The army is developing sophisticated yet expensive technologies to detect invasive tunnels as well to counter the rocket threat of Hizbollah in Lebanon. Add in the threat from the Syrian border and Iran, you have billions to find for defense needs alone.

This is just one facet. The mandarins of the treasury must fathom out rapidly how to relieve small businesses, whose cash flow has been knocked by the war. And there remain outstanding structural issues such reforms of the ports and the Electricity Corporation. Very challenging times.

Challenging, but not doom nor despair. As mentioned above, the economy will face these onslaughts from a position of strength, following a decade of polished performance. For example, foreign currency reserves are at a record high. Israel’s high-tech sector still attracts the attention of overseas investors. And Israel’s new-found  gas reserves are starting to pull in a staggering amount of revenue, including from Egypt. Even the shekel has depreciated about 4% against the dollar in the past month.

What this adds up to is a problem for the politicians. Evidently, the Gaza war exacerbated the issues of an economy that was already beginning to slow down. In parallel, the Israeli economy continues to demonstrate the signs that key fundamentals remain secure and in place. It is for the Prime Minister and his relevant cabinet colleagues to show professional skill in handling the fine balancing act when allocating budgetary resources, rather than caving in to the pressures of the obvious selfish interest groups around them.

That is a whole new campaign in itself.