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Foreign investment in Israel declines 60%

September 7, 2023 at 1:51 pm

People participate in a demonstration against the Israeli government in front of the Tel Aviv Stock Exchange on July 18, 2023 in Tel Aviv, Israel [Dar Yaskil/Getty Images]

Foreign investment in Israel plummeted 60 per cent during the first quarter of the year, according to a report released yesterday by the Finance Ministry.

The data reveals that Israel attracted approximately $2.6 billion in foreign investment during the initial three months of this year, marking a substantial 60 per cent drop when compared to the average quarterly figures observed in 2020 and 2022.

The report states: “The decrease is reflected in both the number of transactions and the number of investors — both decreased by a third compared to past years.’’

Based on statistics provided by the Central Bureau of Statistics, the report highlights that foreign direct investment during the initial quarter of 2023 experienced a significant decline, dropping by 34 per cent to $4.76 billion when compared to the quarterly averages of 2020 and 2022.

Furthermore, the report reveals that the average scale of exit transactions, including mergers and acquisitions, witnessed a steep 80 per cent reduction in the first quarter, dropping to $56 million from its previous standing at approximately $307 million in both 2020 and 2022, reported the Times of Israel.

READ: Palestine decries Israel ‘piracy’ after tax money deduction

The Israeli Finance Ministry notes in the report that a contributing factor to this decline is the drop in the value of many technology companies in the United States. It also highlights global challenges, such as inflation and the Russian invasion of Ukraine, as causes for a worldwide economic downturn.

Despite the report acknowledging that the reduction in investment in Israel may be linked to both “local and international uncertainties,’’ it does not directly address the Israeli far-right government’s judicial plan, which has sparked massive protests and strikes across the country and led companies to move out of the market.

The report comes after Israel in July dismissed the credit rating agency Moody’s report, which warned about “negative consequences” and “significant risk” for the occupation state’s economy following the passage of the first bill of the government’s controversial judicial reforms.

The head of the Tel Aviv Stock Exchange, Itay Ben-Zeev, called on the government to take the warning seriously, calling Moody’s report a “wake-up call.”

However, in response, Israeli Prime Minister Benjamin Netanyahu, said, “This is a momentary reaction,” adding that “Israel’s economy is based on solid foundations and will continue to grow under experienced leadership that leads a responsible economic policy.”