19/7/2024–|Last update: 7/19/202402:29 AM (Makkah Time)
Israeli companies are facing the fallout from the months-long war on the Gaza Strip until at least the end of the year, with 60,000 companies expected to close this year, the Times of Israel reported, citing business intelligence firm Covis BDI.
The forecast comes nine months after Israel’s war on the Gaza Strip, with tens of thousands of businesses affected by rising interest and financing costs, labor shortages, a sharp decline in business volume and operations, disruption of logistics and supplies, and insufficient government assistance, the newspaper said.
By comparison, a record 76,000 businesses were forced to close during the COVID-19 pandemic in 2020, while around 40,000 businesses typically close annually.
Israel’s economy is damaged
“No sector of the economy is immune to the repercussions of the ongoing war,” Covis PDI CEO Yoel Amir told The Times of Israel. “Companies are dealing with a very complex reality: fear of an escalation of the war combined with uncertainty about when the fighting will end and ongoing challenges such as staff shortages, falling demand, growing financing needs, increased procurement costs and logistical issues.”
About 77% of the businesses that have been forced to close since the start of the war, which represents about 35,000 establishments, are small businesses with up to 5 employees and are the most vulnerable in the economy, as they have more urgent financing needs at a time when their operations have been severely damaged and they find it difficult to raise funds, according to Amir.
The money raised by Israeli companies fell at the beginning of 2023, when the economy was suffering from a global downturn and political uncertainty at home due to Prime Minister Benjamin Netanyahu’s proposed judicial reform, and then came the war on Gaza.
It is noteworthy that the war on Gaza caused thousands of business owners to face the sudden and continuous call-up of hundreds of thousands of employees to reserve service to join the fighting in Gaza, and 250,000 Israelis were displaced from their homes.
scope of damage
In a survey of 550 companies in a variety of sectors of the Israeli economy, Covis PDI asked how badly the war had damaged their businesses, and 56% of the sample reported that their sales had declined.
In the previous poll conducted in January 2024, about 64% reported that they had suffered a decline due to the war.
According to Amir, the economic repercussions of the ongoing war were immediately felt by companies operating in the construction, agriculture, tourism, hospitality and entertainment sectors.
Many construction sites in Israel have been closed after 85,000 Palestinian workers were prevented from working there since the beginning of the war due to security concerns, while many foreign workers who work on these sites have left.
“Agriculture, and especially the construction industry, is suffering from a severe shortage of manpower, which is causing significant delays in projects and the delivery of apartments,” the newspaper quoted Amir as saying. “We are seeing some influx of foreign workers returning to Israel, but the reduced supply has also led to higher salaries and higher employment costs.”
In addition, Turkey’s ban on trade with Israel has forced importers of building materials (aluminum, plastics and cement products) to look for alternative sources of supply, which are more expensive due to the high cost of production and transportation.
Israeli companies were looking to increase imports from Turkey after Houthi attacks in Yemen disrupted trade from the Red Sea, raising shipping costs and using longer alternative routes.
