Foreign direct investments in Israel decreased to $1.1 billion in the first quarter of 2024, a decline of 55.8% compared to the last quarter of 2023, according to data from the Israeli Central Bureau of Statistics, and this is the lowest level recorded since the last quarter of 2021.
The Israeli economic newspaper “Calcalist” pointed out that the numbers of foreign investment in Israel are worrying, as they have declined from a quarterly average of $4.8 billion in the past four years.
Gaza war
The newspaper attributed this decline to the devastating Israeli aggression on the Gaza Strip, and called for taking into account the economic and strategic consequences when making decisions to continue the war.
The newspaper adds that the decline in foreign investments by about 56% does not only reflect the fear of the continuation of the war, but also indicates – essentially – that the country’s leadership is not interested in the economy.
The newspaper explained that the decline in direct investments is linked to the decline in investments in the world. However, it reveals that the rate of decline in investments in Israel is higher than in the world.
Foreign direct investments are the purchase of real estate by foreigners, investments of a long-term nature and are essentially real assets, unlike ordinary financial investments.
Influential decisions
Foreign investments play a vital role in economic growth and development, because they provide capital, new technologies, and management expertise. Moreover, in the case of Israel, this number takes on a different meaning, as about 80% of the capital entering the technology sector (the main driver for the economy) comes from abroad.
The economic newspaper quoted the Director of the Research Department at the Bank of Israel, Adi Brander, as saying, “The decisions that await us in the field of defense budgeting will not only affect the 2025 budget, but could affect our growth and standard of living for years to come.”
Israeli investments abroad jumped by about 30% in the first quarter of this year to $2.9 billion, from $2.2 billion in the corresponding quarter of last year, which means that Israelis are fleeing with their investments abroad.
Additional data provided by the Organization for Economic Cooperation and Development shows that Israel’s structural situation with regard to foreign investments is not encouraging when the state imposes many regulatory restrictions on them.
