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60% decline in foreign investments reported so far in 2023 amid Israeli economy concerns

A stock market ticker screen in the lobby of the Tel Aviv Stock Exchange, in the center of Tel Aviv, March 9, 2020. (Photo: Avshalom Sassoni/Flash90)

Foreign investments in the Jewish state fell by a whopping 60% during the first three months of 2023, according to an announcement from an Israeli chief economist last week.

A recent treasury report noted that the total number of transactions reached $6.2 billion, a dramatic drop compared to the first quarter of 2022.

In addition, new data from the Israeli Central Bureau of Statistics (CBS) paints an equally troubling picture of the Israeli economy, characterized by its large focus on export and foreign investments. Direct foreign investments in the Jewish state reached $4.76 billion, representing a 34% quarterly reduction compared to 2022.

With its comparatively small economy, Israel is highly influenced by global economic trends. Part of the decline in foreign investments is, therefore, likely linked to the depreciation of many American tech companies. However, critics in Israel and abroad attribute much of the economic decline to the current uncertainty created by the Netanyahu government’s judicial reform policies and the controversy surrounding them.

Prof. Dan Ben-David, a prominent Tel Aviv University economist and head of the Shoresh Institution for Socioeconomic Research, warned that the Netanyahu government’s policies are undermining the Israeli economy’s viability.

“As nearly all of Israel’s academic economists, myself included, have been saying since this government rolled out its proposed judicial coup legislation, the result will be similar to aiming a flame-thrower at our economy (and hi-tech, our economic locomotive, in particular), our health system, and the general fabric holding together Israeli society and our army,” Ben-David cautioned.

International investors usually avoid market uncertainty and prefer focusing on stable markets.

In July, the leading global credit rating agency Standard and Poor’s warned that “controversy over judicial reforms will continue to harm the Israel economy.”

The All Israel News Staff is a team of journalists in Israel.

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