By : Najla M. Shahwan
Jordan Daily – Thousands of businesses have closed down in “Israel” since the beginning of the war on Gaza, and more are expected to close by the end of the year , exacerbating the economic crisis as estimated by CofaceBdi , the Israeli information services and credit risk management firm said .
Forty-six thousand Israeli businesses have already been forced to close as a result of the ongoing Gaza war and its devastating effect on the Israeli economy, Maariv newspaper reported on July 10, referring to Israel as a “country in collapse.”
“This is a very high number that encompasses many sectors.
About 77 percent of the businesses that have been closed since the beginning of the war, which make up about 35,000 businesses, are small businesses with up to five employees, and are the most vulnerable in the economy,” Yoel Amir, CEO of CofaceBdi, told Maariv.
Moreover, Israeli media reported, citing CofaceBdi’s risk rating, that the most vulnerable industries are the construction industry and its surrounding ecosystem which includes sectors such as ceramics, air conditioning, aluminum, and building materials, which have been significantly impacted.
Moreover, the trade sector, encompassing fashion, footwear, furniture, housewares, and the service sector including cafes, entertainment, leisure services, and transportation, have been severely affected , while the tourism industry faces nearly no foreign tourism, exacerbated by “declining national morale and tourist areas now resembling combat zones”. Furthermore, the agriculture sector, predominantly situated in confrontation areas in the south and north, grapples with manpower shortages, as reported by Maariv.
Israel is in a situation where “damage to businesses is all over the country, and almost no sector has been spared ”, the report added.
However, CofaceBdi CEO estimates that 60,000 Israeli businesses are expected to close by the end of 2024.
The Israeli newspaper explains that “The damage to the Israeli economy is extensive on all fronts as when companies close and cannot meet their financial obligations, it ripples out to affect customers, suppliers, and others within their ecosystem.”
On the other hand, aside from business closures, there has been a significant decline in activity across various sectors since the outbreak of the war.
“In a special survey of managers that we conducted recently, this is the third time since the war, it appears that approximately 56 percent of the managers testified that there has been a significant decrease in the scope of their activity since the beginning of the war,” the report added.
The detailed breakdown shows that the construction industry was affected to the tune of 27%, the services industry by about 19%, and the industrial and agricultural sector by around 17%.
The trade sector saw an impact of approximately 12%, while high-tech and advanced technologies experienced an 11% decrease. That said, the food and beverage sector was affected by only around 6%.
According to the report, “We estimate that by the end of 2024, approximately 60,000 businesses in Israel are expected to close.”
The Israeli newspaper highlights numerous challenges including labor shortages, declining sales, high interest and financing costs, transportation and logistics issues, shortages of raw materials, restricted access to agricultural areas in combat zones, absence of customers impacted by conflict, supply chain disruptions, increased procurement challenges, and more.
On its part, Bank of Israel on July 8 downgraded the country’s growth outlook from its April estimates because of the impact of the war in Gaza on Israel’s economy , with a “long way to go” before its economy can resume normality.
The Israeli economy is now expected to grow by 1.5 per cent in 2024 and by 4.2 per cent in 2025, with the central bank’s projections cumulatively 1.3 percentage points lower than the April forecast.
The sluggish pace of growth assumes that the war’s direct impact on the economy will continue until the beginning of 2025, Bank of Israel said.
“The geopolitical uncertainty has increased, and the economy’s risk premium has risen.
The war has considerable economic ramifications, which impact on Israel’s economy … there is still a very long way to go before fully returning to normal activity,” Amir Yaron, Governor of Bank of Israel said.
The overall level of economic activity is still lower than what prevailed just before the war, he said.
The war in Gaza began when Hamas attacked southern Israel on October 7, killing about 1,139, people and dozens of people are still held captive in the enclave .
Israel’s retaliation has been going on since then, with at least 38,664 Palestinians killed , 89,097 wounded, , 85 per cent of the enclave’s 2.3 million people displaced, and Palestine’s economy ravaged.
Bank of Israel said its latest estimate underscores “more prolonged fighting, and at a greater intensity”, a high level of uncertainty and an increased likelihood of more severe security scenarios.
Najla M. Shahwan is Palestinian author, researcher and freelance journalist. Author of 13 books in literature and a children story collection .She is also Chairwoman of the Palestinian Center for Children’s Literature ( PCCL ) , founder of Jana Woman Cultural Magazine and Recipient of two prizes from the Palestinian Union of Writers.
