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Israel’s economic growth in defiance of grave odds

Despite domestic political unrest over its government's judicial reform push, the data predict growth for Israel's economy.

A protest against the government's judicial overhaul, in Tel Aviv, on July 29, 2023. Photo by Yossi Aloni/Flash90.
A protest against the government's judicial overhaul, in Tel Aviv, on July 29, 2023. Photo by Yossi Aloni/Flash90.
Yoram Ettinger
Yoram Ettinger
Yoram Ettinger is a former ambassador and head of Second Thought: A U.S.-Israel Initiative.

According to a July 17, 2023 Bloomberg report, a leading global investment bank, the NYC-based Jefferies Financial Group, Inc., expects further growth in Israel’s tech sector “despite political unrest over government plans to overhaul the judiciary.”

The report goes on to state that “While there are considerable uncertainties, we anticipate Israel’s tech ecosystem growth and maturation will only accelerate, creating a dominant and necessary opportunity for investors….

“The volume and density of innovation has made Israel a mandatory destination for all leading investors and will likely create a disproportionate number of category-defining winners across sectors in the many years to come.”

Irrespective of the political turmoil associated with the judiciary controversy, the latest data indicates persistent growth in Israel’s high-tech sector in particular, and Israel’s economy in general.

According to Israel’s Central Bureau of Statistics, as presented on July 27, 2023 by senior Israeli economist Shlomo Maoz:

• Notwithstanding the dramatic decline in foreign investment in Israel’s high-tech sector, Israel’s high-tech exports increased by 6.9% during the first five months of 2023, while domestic consumption of Israel’s high-tech products and services decreased by 0.2% during the same period.

• The recent depreciation of the shekel compared with the U.S. dollar has benefitted Israel’s exports.

• Industrial production in the high-tech sector expanded during the first five months of 2023 by 5.6% more than the first five months of 2022, as reflected by the 3% growth in the number of high-tech workers during the first five month of 2023, and the 3.6% rise in the number of working hours during the first five months of 2023.  

• Israel’s defense exports have surged due to the impact of the Russia-Ukraine war upon the demand for advanced Israeli military systems, the substantial increase of Germany’s defense budget and Sweden’s and Finland’s decision to join NATO. In addition, there is the rising Chinese threat to India and the Pacific Ocean countries and the sustained regional and global threat of Sunni (e.g., Muslim Brotherhood) and Shi’ite Islamic terrorism (Iran’s ayatollahs).

• Israel is expected to double its natural gas production to 40 billion cubic meters during the next few years, in response to the growing demand by Europe for alternative sources of natural gas as it seeks to reduce reliance on Russian energy. As a result, there has been growing interest among international energy companies to invest in Israel’s gas exploration. For example, Chevron Corp and Israel’s NewMed Energy and Ratio Energies—the partners in the Israeli offshore gas project, Leviathan—are investing $568 million to build a third pipeline.  

• Unemployment has declined to 3.5% (3% among women). In fact, a shortage of manpower is reported by hundreds of contractors and subcontractors, especially in export and defense-driven companies.

• Israel’s GDP grew by 3.2% during the first quarter of 2023, compared to 3.1% during the previous quarter, while industrial investment grew by 16.2% following a 4.8% decline during the last quarter of 2022.

Originally published by The Ettinger Report.

The opinions and facts presented in this article are those of the author, and neither JNS nor its partners assume any responsibility for them.

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