Israel's economy in danger, fears of collapse under the weight of two wars sami tv

 

 Published: 28 Sep 2024, 19:54

 Shelly Lotan's food startup company's journey in the country's north was only just beginning when Hamas launched rockets into Israel last year.  When the attack began, the Israeli government evacuated all citizens from the area.

 The Israeli government drafted two of Shelly Lotan's employees into the military after the war broke out, the Washington Post reported.  The employees who weren't invited moved the startup's office to the basement of another employee's parents' house.  What happens next is what happens;  The flow of investment somehow dries up.

 Israel's war with Hamas will soon mark one year.  There is no sign of a break in the war with Hamas;  Attacks on Hezbollah forces in Lebanon have begun.  In this situation Lotan's business somehow survives.  Lotan's anger against the government is increasing.  Along with that, the economic pressure is also increasing.

 The current war started when Hamas forces attacked Israel on October 7 last year.  The impact of the war on Israel's economy is not much discussed.  Israel's debt has been downgraded within a year.  Gross Domestic Product (GDP) has contracted.  Thousands of businesses have closed.  Many people lost their jobs;  Companies are outsourcing work from remote locations.  Also, those who join the Israeli army as reservists struggle to balance their main career with military life.

 After October 7, 2023, 287,000 citizens joined the war as reserve troops.  Israel's population is less than one million.  That is, more than one-fourth of the country's people are in the war zone.  The big question is how the economy is doing in this situation.

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 A special aspect of Israel's economy is its large high-tech sector.  Although the war did not have much impact on these sectors, construction and agriculture sectors had a major impact.  These two sectors are again heavily dependent on Palestinians coming to work in Israel with permits.  Their work permit was canceled after October 7 last year.  As a result, the effects of the war are being felt quite well in these two sectors.

 The condition of the tourism sector is deplorable.  Business in this sector has decreased by more than 75 percent.  Jerusalem's Old City is already buzzing with tourists, but many of the area's shops have closed.

 Business at Ayman Shawar's family bakery in Jerusalem's Old City has dropped significantly since October 7.  Ice cream seller Abdul Quader Alami's business has also come down to zero.

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 Defense spending naturally increases during wars.  Israel's defense spending has at least doubled in the past year.  Israel's war losses could rise to 67 billion or 67 billion dollars by 2025, warns the country's central bank.  The Central Bank of Israel made this prediction before Israel's ongoing attack on Lebanon.  As a result, the actual loss will be much higher than this.  Old Jerusalem's economy, heavily dependent on tourism, has collapsed.  Many Palestinian businesses there have closed.  It is unlikely that they will resume business in the near future.

 Dan Ben David, head of Israel's Shoresh Institution for Socioeconomic Research told the Washington Post, Israel's economy is in great danger;  The government has to come out of this situation.  Now all the attention of the government is on the war.  It shows no signs of ending.

 Shelly Lotan runs her own business and raises three children.  Her husband has been fighting as an army reservist for five months.  In the current situation in Israel, venture capital companies are not investing in startups.  As a result, he is struggling to manage the company.  He is struggling to meet the expenses incurred while changing office.  Also, his living expenses are only increasing.

 Having recently had coffee with the owner of another startup company, they decided the smartest thing to do now was to close the business.  Shelly Lotan said, "We now feel that the economy could collapse very soon if nothing significant happens right now."

 However, the concern about the Israeli economy is not only from October 7 of last year.  Before that, the country's Prime Minister Benjamin Netanyahu took the initiative to weaken the Supreme Court and started the protests.  Then there was concern about the country's democratic situation.  Investors are also apprehensive.

 Israel's economy is already strong enough.  Basically, as a major center of technology and research sector, there are a large number of startup companies operating in that country.  Israel is a big name in the world of research and development.

 But after October 7, 2023, the situation started to change.  There is no end in sight to the war with Hamas.  Now that it is involved in a war with Hezbollah, the citizens of the country are worried about where the economy of Israel will stand.  According to them, this economy cannot bear the burden of two wars.