The ongoing conflict in Israel, which escalated on October 7, 2023, has severely impacted local businesses and the economy. Zak Mishriky, owner of Zak's Jerusalem Gifts, stated that the current situation is worse than the COVID-19 pandemic, with approximately 20% of the hotel industry closing down. Many Christians are leaving the Holy Land, prompting Mishriky to focus on maintaining Christian families in the region. In response to these challenges, businesses like Artza Box, founded in 2020, are stepping up to support artisans affected by the war. Artza Box highlights the stories of survivors, such as Daria and Ofek, who escaped the October 7th massacre, and offers Christmas gift boxes that include local products like beeswax candles and Jerusalem stone inscriptions. Mishriky emphasizes the importance of Christians influencing peace in the region, showcasing a community effort to sustain local artisans during these trying times.
Concrete actions are being taken to sever commercial and economic ties with Israel due to the ongoing war in Gaza. Numerous countries and companies worldwide are announcing the severance of commercial ties, cancellation of planned investments, and disruptions in imports and exports with Israel. Before the war, certain companies and funds expressed dissatisfaction with developments in Israel, but these were largely symbolic threats. However, recent boycotts are causing tangible damage.
Turkey has announced the cessation of all trade with Israel, Colombia has ceased coal exports, and fashion companies and investment firms are reconsidering their ties with Israel. U.S. universities are facing pressure to cancel investments and collaborations with Israeli academic institutions. Foreign investors have withdrawn $9 billion from the Israeli stock market. These boycotts and severed economic ties are having a significant impact on the Israeli economy.
Israeli importers are already feeling the effects of the Turkish trade boycott. Despite their confidence in finding alternative solutions, the loss of trade with Turkey is a blow to the Israeli economy. Turkish imports accounted for around three-quarters of Israel's bilateral trade, and finding alternative destinations for over $1.5 billion worth of displaced Israeli exports remains a challenge. However, Greece, Italy, and other countries are willing to fill the trade vacuum left by Turkey.
In addition to the Turkish trade boycott, other countries and companies are also severing ties with Israel. Colombia's cessation of coal exports and the reconsideration of ties by fashion companies and investment firms further contribute to the economic impact. U.S. universities are facing pressure to cancel investments and collaborations with Israeli academic institutions, adding to the growing list of boycotts.
Foreign investors have withdrawn $9 billion from the Israeli stock market, exacerbating the economic challenges faced by the country. These withdrawals reflect the concerns and uncertainties surrounding the ongoing conflict and the boycotts against Israel. The Israeli government has yet to formulate a comprehensive response to these boycotts and severed economic ties, and there has been no serious discussion at the governmental level about the implications of these actions.
The war in the Gaza Strip has driven foreign investors away from Israel. Foreign direct investment (FDI) in Israel has declined by 50% in the last three months of 2023, compared to the previous year. FDI barely surpassed the US$1 billion mark, compared to an average of US$4.8 billion annually over the previous four years. The high-tech industry, which provides half of Israel's exports, is particularly affected, with 80% of investors showing reluctance. American company Intel has suspended the expansion of its microprocessor plant in Israel. Companies from the United States are seeking quieter locations, leading to a surge in their direct investments abroad. Israeli billionaires are also under pressure as Israel is no longer considered one of the top 10 most attractive countries for foreign investors. The war has tarnished Israel's image and poses a threat to the country's economy. The budget deficit to finance the war could reach US$67 billion by 2025, according to the Bank of Israel.
Following the war, many Israelis decided this year to give up vacations in Israel and abroad. In some countries, the arrival of Israelis was immediately stopped due to the governments' policies towards us during the war, such as Turkey and Morocco. However, it turns out that even in countries that love Israel, there is a great shortage of Israelis, which greatly affects their economy. One of them is Georgia. From the data of the Georgian Ministry of Tourism published in 'EuroNews', it appears that following the war in Israel, the number of Israeli tourists in the country decreased significantly. The chairman of the Georgian Restaurant Association also expressed concern, saying: 'Many orders have been canceled, and forecasts for new orders are very low. Therefore, unfortunately, this year we will not meet the expectations we set for ourselves following the shortage of Israelis.' However, the head of the Georgia Tourism Bureau believes that the summer will still be busy and successful. 'The data for the first quarter of 2024 were very good. This result allows us to assume that the second quarter, the summer season and the general trend toward the end of the year in the tourism industry will also be good,' she concluded.
The Israeli economy is bracing for significant losses as boycotts intensify. The severance of commercial and economic ties with Israel, driven by the ongoing war in Gaza, is causing tangible damage. The Turkish trade boycott, Colombia's cessation of coal exports, reconsideration of ties by fashion companies and investment firms, pressure on U.S. universities, and foreign investors' withdrawal from the stock market are all contributing to the economic challenges faced by Israel. The war has also led to a decline in foreign direct investment, particularly in the high-tech industry, with 80% of investors showing reluctance. Companies from the United States are seeking quieter locations for their investments, and Israeli billionaires are feeling the pressure as Israel is no longer considered one of the top 10 most attractive countries for foreign investors. The war has tarnished Israel's image and poses a threat to the country's economy, with the budget deficit to finance the war projected to reach US$67 billion by 2025.