60,000 Israeli businesses may be forced to close in 2024 due to ongoing multi-front war

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The Israel-based information company CofaceBDI predicts that up to 60,000 businesses will be forced to close down in 2024. The dismal forecast comes after more than nine months of war between Israel and the Hamas terrorist organization, as well as the conflict with Hezbollah forces in the north.

CofaceBDI surveyed managers from 550 businesses from various Israeli business segments about the war’s impact on their business. A small majority – 56% reported a declining turnover in their business due to the war. While a significant number, it is an improvement in comparison with a January survey when about 64% of the businesses reported declining profits.

The ongoing war has already taken a toll on the Israeli economy with a manpower shortage, inflation and declining revenues. In addition, many local businesses have been disappointed by insufficient financial assistance from the Israeli government amid the war. Approximately 46,000 Israeli businesses have already closed since the Oct. 7 Hamas terror attack, according to CofaceBDI.

CofaceBDI CEO Yoel Amir assessed that the ongoing war impacts all sectors of the Israeli economy.

“There is effectively no sector in the economy that is immune to the repercussions of the ongoing war,” Amir told The Times of Israel. However, he noted that tourism, agriculture, construction and entertainment were most severely harmed by the military conflict.

“Agriculture but especially the construction industry suffers from a severe shortage of manpower causing significant delays of projects and in the handover of apartments,” he assessed. “We are seeing some influx of foreign workers who have returned to Israel, but the low supply has also led to an increase in salaries and higher costs of hiring.”

“Businesses are coping with a very complex reality: fear about an escalation of the war coupled with uncertainty about when the fighting will end alongside continued challenges such as staff shortage, low demand, growing financing needs, an increase in procurement costs and logistical issues, and most recently the export ban by Turkey are all making it increasingly difficult for Israeli businesses to survive this period,” Amir said.

In early May, Turkish President Recep Tayyip Erdoğan announced a complete halt to trade with Israel due to the Turkish leader’s opposition to Israel’s war of self-defense against the Hamas aggression. At the time, Israeli Foreign Minister Israel Katz quickly condemned Erdoğan, saying that he “crossed a line and blocked ports for Israeli exports and imports. This is how a dictator behaves – trampling on the interests of the Turkish people, businessmen and ignoring international trade agreements.”

Israel is reportedly considering responding to the Turkish trade ban with a ban on direct imports from Turkey, a move that could potentially increase costs for businesses in Israel. The war has mainly affected small businesses. A whopping 77% of the companies that were recently forced to close were businesses with up to five employees.

“Following the Turkey boycott, there is also concern that other countries will follow with similar moves as importers are looking for alternative suppliers from other countries,” Amir said.

He urged the Israeli government "to signal to the market and investors that it can take tough decisions in an effort to restore stability.”

On average, about 40,000 Israeli businesses close annually during regular years. While the current business closure rate is significantly higher than the norm it is still below the record 76,000 closed businesses in 2020 during the coronavirus pandemic.