Since the onset of the Iron Swords War in October, Israel has witnessed an alarming and unprecedented collapse in its business sector. According to a recent report by Israel’s Maariv newspaper, an astonishing 46,000 Israeli companies have shuttered their doors, with projections suggesting this number could surge to 60,000 by the year's end. Yoel Amir, CEO of business information company CofaceBDI, described this as a catastrophic blow to the nation's economy, encompassing a broad range of sectors.

The Vulnerability of Small Businesses

A staggering 77% of these closures are small businesses, the backbone of Israel's economy. These enterprises have borne the brunt of the economic fallout, exacerbated by the reluctance of American and European clients to engage with Israeli companies amidst rising anti-Israel protests across the West. This fear-driven exodus has led to a significant contraction in business activities, dealing a severe blow to the Israeli market.

| Hebrew newspaper Maariv:

46,000 Israeli companies have closed their doors since the outbreak of war on October 7, with expectations that the number will rise to 60,000 companies by the end of this year.#Israel #Hamas #Hezbollah pic.twitter.com/2bc2hrjSnU

— MenaLive (@MenaLive_) July 11, 2024

Sector-Specific Devastation

The war's impact has rippled across various industries, with construction and its related sectors, such as ceramics, air conditioning, aluminium, and building materials, suffering the most. Consulting firms, once a thriving part of Israel’s digital marketing and technology services, have also been decimated. The trade sector, encompassing fashion, furniture, and household appliances, along with service industries like cafes, entertainment venues, and transportation, have not been spared either.

Tourism: From Bustling to Bare

Tourism, a critical pillar of Israel’s economy, has virtually collapsed. The once-bustling streets of tourist hotspots like Tiberias and Nazareth now stand eerily empty. Hotels and vacation spots that were overbooked just a year ago now face a bleak reality of empty rooms and cancelled bookings. The absence of foreign tourists has also crippled micro-businesses reliant on the sale of souvenirs and knick-knacks.

Just as Israel’s tourism was recovering from the ravages of COVID-19, the October 7 attacks that launched the Hamas war have left thousands in the industry struggling for survival once again. https://t.co/0pjwL2bwtx

— The New York Sun (@NewYorkSun) July 7, 2024

Widespread Economic Carnage

“The damage in combat zones is more severe, but the economic devastation is nationwide, sparing almost no sector,” Amir noted. The knock-on effects are extensive, as companies unable to repay debts inflict collateral damage on customers, suppliers, and interconnected businesses. The ripple effect is crippling, with corporate activity sharply declining since the war’s onset.

Dire Predictions and Government Inaction

In a recent poll, 56% of commercial company managers in Israel reported a significant downturn in their operations since the war began. Amir forecasts that by the end of 2024, over 60,000 companies will have ceased operations. For context, during the 2020 COVID-19 crisis, approximately 74,000 companies closed, but government aid enabled many to reopen. Today, amidst a significant budget deficit and dwindling foreign reserves, the Israeli government offers scant support to beleaguered small businesses.

The war in Gaza along with a bloated financial commitment to coalition partners has been negatively impacting Israel's economy.

This time, it's the the budget deficit.https://t.co/Db7roPqTnE

— The Judean (@TheJudean) July 8, 2024

Overcoming Unprecedented Challenges

Israeli companies now face multifaceted challenges: labor shortages, plummeting sales, high interest rates, exorbitant financing costs, logistical nightmares, raw material shortages, inaccessible agricultural lands in combat zones, and reduced customer bases due to the war. Despite these hurdles, Amir remains optimistic about the future.

A Glimmer of Hope Amidst the Gloom

“Despite all the difficulties and challenges, I believe in our ability to recover from this crisis. The Israeli economy has demonstrated resilience and an extraordinary capacity to bounce back from severe crises. Through joint efforts, mutual support, and the determination and creativity of Israeli businesses, we will restore the economy and achieve renewed growth after the war,” Amir asserted.

A Nation's Resolve Tested

While Israel has weathered many storms, the prolonged nature of this conflict, now in its ninth month, presents unprecedented challenges. The closure of critical regions, particularly the northern tourist areas under constant threat from Hezbollah, adds to the complexity. Israel's reputation as the "Start-up Nation" is under siege, but the nation’s resolve and collective effort will be crucial in reclaiming its former economic glory.

Conclusion

In these trying times, the resilience of the Israeli spirit and the unwavering commitment of its people will be the keystones in rebuilding the economy. The journey ahead is fraught with challenges, but Israel's history of overcoming adversity provides a beacon of hope for a brighter future.