🧵 Why Israel’s economy is bleeding out
UP TO 60,000 ISRAELI BUSINESSES TO CLOSE IN 2024
“The economic fallout from the ongoing war was most immediately felt by businesses active in the construction, agriculture, tourism, hospitality, and entertainment sectors, according to Amir.
That’s as 85,000 Palestinian workers have virtually disappeared from Israel’s construction industry since the war’s start, as they have not been allowed into Israel to work due to security concerns, while many foreign workers working at building sites left the country. This has caused many building sites to shut down completely due to a lack of workers.
‘Agriculture but especially the construction industry suffers from a severe shortage of manpower causing significant delays of projects and in the handover of apartments,” said Amir. “We are seeing some influx of foreign workers who have returned to Israel, but the low supply has also led to an increase in salaries and higher costs of hiring.’”
See: timesofisrael.com/up-to-60000-is…
“The economic fallout from the ongoing war was most immediately felt by businesses active in the construction, agriculture, tourism, hospitality, and entertainment sectors, according to Amir.
That’s as 85,000 Palestinian workers have virtually disappeared from Israel’s construction industry since the war’s start, as they have not been allowed into Israel to work due to security concerns, while many foreign workers working at building sites left the country. This has caused many building sites to shut down completely due to a lack of workers.
‘Agriculture but especially the construction industry suffers from a severe shortage of manpower causing significant delays of projects and in the handover of apartments,” said Amir. “We are seeing some influx of foreign workers who have returned to Israel, but the low supply has also led to an increase in salaries and higher costs of hiring.’”
See: timesofisrael.com/up-to-60000-is…
ISRAEL’S CREDIT RATING DOWNGRADED WITH FURTHER DOWNGRADING TO “JUNK EXPECTED
Moody’s: "The key driver for the downgrade is our view that geopolitical risk has intensified significantly further, to very high levels, with material negative consequences for Israel's creditworthiness in both the near and longer term. The ratings would likely be downgraded further, potentially by multiple notches, if the current heightened tensions with Hezbollah turned into a full-scale conflict.”
See: reuters.com/world/middle-e…
Moody’s: "The key driver for the downgrade is our view that geopolitical risk has intensified significantly further, to very high levels, with material negative consequences for Israel's creditworthiness in both the near and longer term. The ratings would likely be downgraded further, potentially by multiple notches, if the current heightened tensions with Hezbollah turned into a full-scale conflict.”
See: reuters.com/world/middle-e…
ISRAEL HAD SHARPEST ECONOMIC FALL OF ALL 38 OECD COUNTRIES
“Data shows that Israel’s economy is experiencing the sharpest slowdown among the wealthiest countries of the Organisation for Economic Cooperation and Development (OECD). Its GDP contracted by 4.1% in the weeks after the October 7 Hamas-led attacks. And the downturn continued into 2024, falling by an additional 1.1% and 1.4% in the first two quarters.”
See: theconversation.com/israel-11-mont…
“Data shows that Israel’s economy is experiencing the sharpest slowdown among the wealthiest countries of the Organisation for Economic Cooperation and Development (OECD). Its GDP contracted by 4.1% in the weeks after the October 7 Hamas-led attacks. And the downturn continued into 2024, falling by an additional 1.1% and 1.4% in the first two quarters.”
See: theconversation.com/israel-11-mont…
ISRAEL’S COST OF WAR IS $67 BILLION BY YEAR’S END LEADING TO FURTHER DISINVESTMENT
“The Bank of Israel estimated in May that costs arising from the war would total 250 billion shekels ($66 billion) through the end of next year, including military outlays and civilian expenses, such as on housing for thousands of Israelis forced to flee their homes in the north and south. That is equivalent to roughly 12% of Israel’s GDP. Those costs look set to rise further as fiercer fighting with Iran and its proxies, including Hezbollah in Lebanon, adds to the government’s defense bill and delays the return of Israelis to their homes in the country’s north. Israel launched a ground incursion into southern Lebanon targeting Hezbollah on September 30.”
See: cnn.com/2024/10/04/eco…
“The Bank of Israel estimated in May that costs arising from the war would total 250 billion shekels ($66 billion) through the end of next year, including military outlays and civilian expenses, such as on housing for thousands of Israelis forced to flee their homes in the north and south. That is equivalent to roughly 12% of Israel’s GDP. Those costs look set to rise further as fiercer fighting with Iran and its proxies, including Hezbollah in Lebanon, adds to the government’s defense bill and delays the return of Israelis to their homes in the country’s north. Israel launched a ground incursion into southern Lebanon targeting Hezbollah on September 30.”
See: cnn.com/2024/10/04/eco…
MASSIVE ECONOMIC IMPACT OF YEMEN BLOCKADE
“The impact of the Houthi attacks on the Israeli economy has been severe, according to Abu Shehadeh.
That is the case especially because “Israel does not have natural resources and relies on imports to meet its various needs,” he said.
Abu Shehadeh explained that as the Israeli Red Sea port of Eilat has been practically at a standstill, the cost of getting goods to the Mediterranean ports of Haifa and Ashdod has risen enormously, which has increased costs for consumers. In August, Israel’s consumer price index was at its highest level since October 2023”
See: aljazeera.com/news/2024/10/8…
“The impact of the Houthi attacks on the Israeli economy has been severe, according to Abu Shehadeh.
That is the case especially because “Israel does not have natural resources and relies on imports to meet its various needs,” he said.
Abu Shehadeh explained that as the Israeli Red Sea port of Eilat has been practically at a standstill, the cost of getting goods to the Mediterranean ports of Haifa and Ashdod has risen enormously, which has increased costs for consumers. In August, Israel’s consumer price index was at its highest level since October 2023”
See: aljazeera.com/news/2024/10/8…
SEVERE SHORTAGE IN MANPOWER IN OCCUPATION ARMY
“The government on Sunday voted to back a bill lengthening mandatory service for male Israel Defense Forces soldiers to three years, in an attempt to alleviate manpower shortages caused by ongoing hostilities on the northern border and the war in Gaza.
According to the proposed legislation, which is expected to be passed in an expedited manner, for the next five years, male soldiers will serve 36 months, meaning the order will effectively cover a period of eight years.”
See: timesofisrael.com/facing-manpowe…
“The government on Sunday voted to back a bill lengthening mandatory service for male Israel Defense Forces soldiers to three years, in an attempt to alleviate manpower shortages caused by ongoing hostilities on the northern border and the war in Gaza.
According to the proposed legislation, which is expected to be passed in an expedited manner, for the next five years, male soldiers will serve 36 months, meaning the order will effectively cover a period of eight years.”
See: timesofisrael.com/facing-manpowe…
SANCTIONS LEADING TO GOODS SHORTAGE AND PRICE HIKES
“‘Following the Turkey boycott, there is also concern that other countries will follow with similar moves as importers are looking for alternative suppliers from other countries,” said Amir. “Insurance tariffs are going up, costs are rising, and the government will need to raise taxes, such as VAT to fund war spending which in turn places a heavy burden on businesses.’
A decline in consumer spending, the lack of tourism, and the mass evacuations from war-affected areas in the north and south of Israel have hit businesses in the trade and services sector, including leisure businesses, as well as cafes and restaurants, according to Amir.”
See: timesofisrael.com/up-to-60000-is…
“‘Following the Turkey boycott, there is also concern that other countries will follow with similar moves as importers are looking for alternative suppliers from other countries,” said Amir. “Insurance tariffs are going up, costs are rising, and the government will need to raise taxes, such as VAT to fund war spending which in turn places a heavy burden on businesses.’
A decline in consumer spending, the lack of tourism, and the mass evacuations from war-affected areas in the north and south of Israel have hit businesses in the trade and services sector, including leisure businesses, as well as cafes and restaurants, according to Amir.”
See: timesofisrael.com/up-to-60000-is…
LABOUR MARKET COLLAPSE AS WAR EATS UP LABOUR FORCE
“Israeli workers who might have filled the gaps have been called up for military reserve duty while Palestinian labourers are currently banned as security risks. Seventy percent of the quota is specifically set aside for agricultural labourers. Israeli agriculture is facing staggering losses in production and manpower.”
“Israeli workers who might have filled the gaps have been called up for military reserve duty while Palestinian labourers are currently banned as security risks. Seventy percent of the quota is specifically set aside for agricultural labourers. Israeli agriculture is facing staggering losses in production and manpower.”
ISRAEL’S CRISIS OF CAPITAL FLIGHT
“Israel’s once-vibrant tech sector is facing a worrying trend: foreign investors are pulling out. This exodus, reflected in a staggering 55% drop in foreign investments during the first quarter (Q1) of 2024, paints a picture far more complex than just anxieties about ongoing conflicts. Data from Israel’s Central Bureau of Statistics (CBS) reveals a deeper story.”
“Israel’s once-vibrant tech sector is facing a worrying trend: foreign investors are pulling out. This exodus, reflected in a staggering 55% drop in foreign investments during the first quarter (Q1) of 2024, paints a picture far more complex than just anxieties about ongoing conflicts. Data from Israel’s Central Bureau of Statistics (CBS) reveals a deeper story.”
BDS RAISES THE LIABILITIES TO COMPANIES DECIDING TO DO BUSINESS IN ISRAEL
Boycotts on major companies have had significant impact in 2024. This will only increase as Israeli becomes an even greater pariah state. Boycotts had a significant impact on profits. Every risk management firm in the world then told their clients to avoid business in Israel. Israel is now a massive liability.
In 2024: Portland, Oregon; Berkeley, California; and St. Louis, Missouri have all passed BDS measures focused on specific companies, Scotiabank cuts shares in Elbit Systems by half, Elbit-owned company in Massachusetts shut its doors, and Palestine Action activists forced the permanent closer of Elbit factories in Tamworth and Oldham in England, the U.S. International Union of Painters and Allied Trades announced the group’s international pension fund will divest from companies supporting the destruction in Gaza, and many U.S. and Canadian universities announced divestments from Israel and companies profiting from Israel
Boycotts on major companies have had significant impact in 2024. This will only increase as Israeli becomes an even greater pariah state. Boycotts had a significant impact on profits. Every risk management firm in the world then told their clients to avoid business in Israel. Israel is now a massive liability.
In 2024: Portland, Oregon; Berkeley, California; and St. Louis, Missouri have all passed BDS measures focused on specific companies, Scotiabank cuts shares in Elbit Systems by half, Elbit-owned company in Massachusetts shut its doors, and Palestine Action activists forced the permanent closer of Elbit factories in Tamworth and Oldham in England, the U.S. International Union of Painters and Allied Trades announced the group’s international pension fund will divest from companies supporting the destruction in Gaza, and many U.S. and Canadian universities announced divestments from Israel and companies profiting from Israel
ISRAEL IRON DOME SYSTEM RUNNING OUT OF AMMUNITION
There are an estimated 200,000 missiles in Hezbollah’s arsenal that will continue to rain down on Israeli cities, each costing a fraction of the cost of an Israeli interceptor. Hezbollah has yet to use its more advanced missiles. News seems to be trickling out that Israel is running short on the interceptors. All of this makes life more untenable in Israel, costs the state more because of damage, and leads to more capital flight. “Israel is encountering a potential shortage of rocket and missile interceptors in its air defense array amid the yearlong war in Gaza and Lebanon, and as it prepares for a possible escalating conflict with Iran, according to a British report Tuesday.
Citing experts and former military officials, the Financial Times said that Washington is assisting the Jewish state in addressing the matter, in particular through its promise to send a Terminal High Altitude Area Defense missile system (THAAD), but Jerusalem could increasingly find itself needing to decide which targets it wants to prioritize defending.”
There are an estimated 200,000 missiles in Hezbollah’s arsenal that will continue to rain down on Israeli cities, each costing a fraction of the cost of an Israeli interceptor. Hezbollah has yet to use its more advanced missiles. News seems to be trickling out that Israel is running short on the interceptors. All of this makes life more untenable in Israel, costs the state more because of damage, and leads to more capital flight. “Israel is encountering a potential shortage of rocket and missile interceptors in its air defense array amid the yearlong war in Gaza and Lebanon, and as it prepares for a possible escalating conflict with Iran, according to a British report Tuesday.
Citing experts and former military officials, the Financial Times said that Washington is assisting the Jewish state in addressing the matter, in particular through its promise to send a Terminal High Altitude Area Defense missile system (THAAD), but Jerusalem could increasingly find itself needing to decide which targets it wants to prioritize defending.”
TENS OF THOUSANDS HAVE SILENTLY LEFT ISRAEL AND COUNTLESS MORE EXPECTED TO LEAVE AND NOT RETURN
“He cited an accelerating “brain drain” of doctors and other professionals as a worrying sign that some of Israel’s elite already feel they no longer have a future in the country. And without them, Israel itself might struggle to have a future.
Tech firms drive the economy but only employ 10% of the workforce, Bardim told Haaretz in a recent interview, warning that, without that talent, Israel’s recent years of economic success could unravel. “That’s only 400,000 people, 50,000 of whom comprise the main engine – engineers, senior executives at funds, whom the whole world is trying to recruit. If these people leave the country, we’ll become Argentina.”
Ciechanover fears the process is accelerating faster than is captured by official statistics or anecdotal observations. It takes time to pass the exams needed to practise in another country, and find jobs, housing and schools. Many colleagues don’t tell friends or family when they start this process.
“We call it silent departing,” said Ciechanover. “They won’t let anyone know until they board the airplane.” He cited the recent loss of a senior paediatrician who announced she had decided to extend a fellowship for three years days before she was expected back in Israel.”
See: theguardian.com/world/2024/oct…
“He cited an accelerating “brain drain” of doctors and other professionals as a worrying sign that some of Israel’s elite already feel they no longer have a future in the country. And without them, Israel itself might struggle to have a future.
Tech firms drive the economy but only employ 10% of the workforce, Bardim told Haaretz in a recent interview, warning that, without that talent, Israel’s recent years of economic success could unravel. “That’s only 400,000 people, 50,000 of whom comprise the main engine – engineers, senior executives at funds, whom the whole world is trying to recruit. If these people leave the country, we’ll become Argentina.”
Ciechanover fears the process is accelerating faster than is captured by official statistics or anecdotal observations. It takes time to pass the exams needed to practise in another country, and find jobs, housing and schools. Many colleagues don’t tell friends or family when they start this process.
“We call it silent departing,” said Ciechanover. “They won’t let anyone know until they board the airplane.” He cited the recent loss of a senior paediatrician who announced she had decided to extend a fellowship for three years days before she was expected back in Israel.”
See: theguardian.com/world/2024/oct…
SILENT BOYCOTT DUE TO CONSUMER OUTRAGE FEAR LEADS TO DISINVESTMENT
“Experts point out a “silent” boycott has emerged since October 7.
“In some cases, it is not even intentional,” said Yoel Israel, founder and CEO of the high-tech marketing firm WadiDigital and IsraelTech. He explained that because the consequences of working with an Israeli company are “uncertain,” businesses often opt not to, even if they prefer to.
While Israel couldn’t name specific Israeli companies facing this challenge due to confidentiality, he confidently stated that he has spoken with many American businesses that, since October 7, have stopped working with Israeli compan
“Experts point out a “silent” boycott has emerged since October 7.
“In some cases, it is not even intentional,” said Yoel Israel, founder and CEO of the high-tech marketing firm WadiDigital and IsraelTech. He explained that because the consequences of working with an Israeli company are “uncertain,” businesses often opt not to, even if they prefer to.
While Israel couldn’t name specific Israeli companies facing this challenge due to confidentiality, he confidently stated that he has spoken with many American businesses that, since October 7, have stopped working with Israeli compan
AMERICA MAY NOT BE ABLE TO SUPPORT ISRAEL FOREVER
I see a lot of people in the comments here saying that America will continue to foot the bill. This is not an incorrect analysis since Israel essentially operates as a glorified American military base. However, this is changing. Israel is often acting against the interests of the imperial core. And as a leaked ADL call revealed that polling showed a majority of young Americans support Palestinians and an end to U.S. funding and arming Israel. If Kamala loses, the political pressure will be even greater for future Democratic presidential candidates to oppose a blank cheque to Israel. Ultimately, the economic collapse of Israel may also require a significant weakening of the American imperial block
I see a lot of people in the comments here saying that America will continue to foot the bill. This is not an incorrect analysis since Israel essentially operates as a glorified American military base. However, this is changing. Israel is often acting against the interests of the imperial core. And as a leaked ADL call revealed that polling showed a majority of young Americans support Palestinians and an end to U.S. funding and arming Israel. If Kamala loses, the political pressure will be even greater for future Democratic presidential candidates to oppose a blank cheque to Israel. Ultimately, the economic collapse of Israel may also require a significant weakening of the American imperial block
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