'Israel's' crisis may bring down economy, investment with it: Experts
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Economists believe that the unrest that the Israeli occupation is witnessing could deter investment in "Israel's" economic sector and technological industry.
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Israeli occupation police use water cannons to disperse anti-overhaul protestors (AP)
Economists are speculating that if contentious judicial changes continue, "Israel's" economy would risk rating downgrades, less foreign investment, and a weakened tech industry, Reuters reported.
Physicians to software businesses have marched in the streets in protest while the shekel has dropped more than 2% against the dollar in the last week, bringing the total drop since the plans were announced in January to more than 9%.
Read more: Herzog takes double aim at Netanyahu, reservists for damaging security
Reuters quoted Hamish Kinnear, senior Middle East and North Africa analyst at Verisk Maplecroft, as saying that the main issue is the uncertainty for investors, explaining that "Israel" lacks a "clear endpoint," with a question mark hanging over its economy.
"Israel's" stock market has also underperformed, with the MSCI "Israel" index behind the key global stock indexes, such as the MSCI All Country World, by roughly 14% as domestic investors avoided the market, the news agency pointed out.
Morgan Stanley warned that if the Israeli occupation does not resolve its internal turmoil, GDP is expected to grow 1.0% this year and 1.6% next year instead of the projected previous estimate of 2.5% and 3%.
Investors will shun "Israel"
According to Roger Mark, many investors, as well as major rating agencies, had expected the occupation government to tone down the change to a larger extent. Investors may shun "Israel" now that that appears doubtful, as per Reuters.
"From a bond perspective, I think most bond and FX investors will be waiting on the sidelines, potentially looking to fade any extremes that we might see in the next few weeks," Mark expressed.
Economists also believe the unrest could deter investment in "Israel's" technological industry, which accounts for over a fifth of GDP, more than half of exports, and a quarter of income tax receipts.
According to a recent Israeli Innovation Authority poll, the uncertain business environment has caused up to 80% of new Israeli firms to register overseas until March of this year, up from 20% in 2022, and tech company financing has already dropped by 65% in the second quarter.
Nicholas Farr, an emerging Europe economist with Capital Economics expressed that the turmoil "threatens to push the economy onto a permanently lower growth path."
The occupation's credit rating is also under investigation, with all three major agencies, S&P Global, Moody's, and Fitch, expressing reservations about the government's policy orientation.
Moody's downgraded "Israel's" sovereign rating to "dislike," while S&P predicted on Thursday that the demonstrations will reduce economic growth this year.
In May, S&P cautioned that its AA- "Israel" rating might be lowered if "regional or domestic political risks escalated sharply, depressing Israel's economic, fiscal, and balance-of-payments metrics."
Meanwhile, Fitch, which has already downgraded "Israel's" rating to A+, has already stated that the changes in the court might have a "negative impact on the credit profile" by undermining governance indicators, policymaking, and damaging investor sentiment.
Natalia Gurushina, a chief economist at fund manager VanEck, believes this could lead to "a significant institutional deterioration, and potentially affect capital inflows into areas like the tech sector."
Israeli media reported on Saturday that tens of thousands of settlers took to the streets to protest against the judicial overhaul put forward by the government of Israeli occupation Prime Minister Benjamin Netanyahu, after the Israeli Knesset last week passed in a final vote a bill to restrict the "reasonableness law", implying that the reason of the cabinet surpasses that of the judiciary.
A couple of days ago, a poll published by the Israeli newspaper Maariv showed that 58% of Israeli settlers fear an actual internal war in the Israeli occupation entity, amid chaos and division in an Israeli settler community over the judicial overhaul.
A couple of days ago, former Israeli occupation prime minister Ehud Olmert told the British news outlet Channel 4 News that "Israel" is nearing an internal war.
This also comes as an increasing number of Israeli reservists are ending or threatening to end their military service in protest against the judicial overhaul.
