Israel's Resilience: An Enduring Economy

Last Oct. 7, Israel faced a severe, unprovoked attack by the terrorist organization Hamas, and currently, Israel is at war with this murderous group, which uses intimidation tactics both toward its own population and toward Western countries to deny the State of Israel the legitimacy to act. Considering this situation, it is important to reaffirm the interplay between Israel's security concerns and its economic vitality. 

Despite the harsh outlook for this conflict, Israel continues to have a strong military and economy, which shall endure after the war ends, remaining the No. 1 source of innovation in the world. Investing in Israel was profitable before Oct. 7 and will continue to be very profitable even after the war. 

The Israeli government remains fully functional even in these trying times. The Ministry of  Economy and Industry, alongside other government agencies, has already started working on suitable programs to mitigate the economic impact of the conflict. Also, the Foreign Trade  Administration continues to operate, which means that there has not been a pause regarding  international trade issues, ensuring the continuity of export and import contracts. It is also essential to mention that, in Israel, there are collaborative organizations, such as the Export Institute, whose objective is to address the specific challenges that companies may face during  the export process. Through these resources, companies are able to maintain their partnerships and collaborations with

customers and investors. 

Over the past few years, Israel has experienced a change in its economic landscape. From 2002  to the present, Israel's GDP has increased about three times highlighting the remarkable  resilience of the Israeli economy, even in the face of challenges. In 2021, for the first time, exports of services surpassed exports of goods. This transformation highlights Israel's growing prowess in the services sector, especially in high-tech industries. Moreover, thanks to the high level of economic activity in the pre-war period, numerous Israeli companies are experts in international  trade and have the capacity to deal with any matter remotely, which makes them resilient even in  times of distress. 

Israel's resilience, measured both in terms of its military strength and its economy, has been put to the test in numerous security events in the past. Yet on each occasion, Israel has emerged  victorious, experiencing a full economic recovery and positive growth rates within months of these events. Prior to the outbreak of the recent conflict, Israel enjoyed a budget surplus and substantial foreign exchange balances, which will stabilize. 

Regardless of the current security situation, Israel's financial and banking systems continue to operate normally, and transactions are proceeding accordingly. It is important to highlight that Moody's, the global credit rating agency, has postponed the publication of the report on Israel's credit rating, which indicates confidence in the country's financial stability.  

This aligns with Israel’s previous economic behavior. Throughout the years, foreign direct investments (FDI) in Israel have been somewhat affected by global events; such as the collapse of the dot-com bubble in the early 2000s, the 2008 economic crisis and the outbreak of the COVID-19 epidemic in late 2019. Notwithstanding, the global influences and the potential impact of security developments in Israel on foreign investments, the flow of FDI into Israel is continuously  
recovering, reaching new highs in the last few years. 

As has been proven many times in Israel's history, times of crisis can in fact be followed by opportunities; even through difficulties, good opportunities and innovative solutions can arise. The perfect example is that, over the years, going back even to the conflicts of 2006, 2008, 2012, 2014 and 2021, Israeli exports have shown significant growth over the years. Conspicuously, the regional security challenges have had a limited impact on Israel's economic stability. The Israeli technology ecosystem and its companies have shown remarkable resourcefulness, offering technological solutions to meet both the immediate challenges on the front line and the economic challenges in the aftermath, both nationally and globally. 

Israel remains unwavering in its pursuit of economic strength and innovation, even in the face of security threats. As the nation balances the need to tackle security issues with economic resilience, it embraces investment from global partners who recognize the remarkable potential Israel has to offer. Israel is a country that has demonstrated on several occasions that in the face of these threats, its economy is well built, stable and resilient and this situation is no exception.

Israel is standing strong, and will continue to do so as an economic power in the Middle East, being recognized globally as the “Startup Nation” and the No. 1 source of innovation.  Companies from around the world have chosen to invest in Israel, acknowledging the nation's democratic values, commitment to progress, and innovative spirit. Now, more than ever, is the time to support and invest in Israel.