Up to 60,000 war-affected Israeli businesses may shut down in 2024
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The CEO of the business information company CofaceBDI says no sector in the Israeli economy is immune to the repercussions of the ongoing war.
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Empty streets in Sderot, southern occupied Palestine, on Saturday, Nov. 18, 2023. (AP)
Israeli businesses are expected to grapple with the repercussions of the months-long war on Gaza at least until the end of the year, with projections indicating up to 60,000 business closures in 2024, The Times of Israel reported, citing business information company CofaceBDI.
This forecast follows the closure of 46,000 businesses over the past nine months, attributed to the consequences of the ongoing war, the news website pointed out.
It noted that many businesses have been severely impacted by high interest rates, costly financing, manpower shortages, significant drops in revenue and operations, logistical disruptions, and insufficient government support.
For comparison, a record 76,000 businesses closed during the 2020 coronavirus pandemic, while in a typical year, around 40,000 businesses shut down, the Israeli website highlighted.
CofaceBDI CEO Yoel Amir told The Times of Israel that no sector in the economy is immune to the repercussions of the ongoing war.
He explained that businesses are facing 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."
He added that all these factors, along with the recent export ban by Turkey, further exacerbate the difficulties for Israeli businesses during this period.
Amir indicated that approximately 77% of the businesses that closed since the beginning of the war, around 35,000 enterprises, are small businesses with up to five employees. These businesses are the "most vulnerable", having immediate financing needs when their operations are disrupted and facing difficulties raising essential funds.
The Times of Israel said that thousands of corporate owners struggled with the call-up of hundreds of thousands of employees to reserve duty and the displacement of 250,000 Israelis from their settlements amid the war on Gaza and the fighting with the Lebanese Resistance group Hezbollah on the Northern Front.
According to Amir, the economic fallout has been most immediate for businesses in the construction, agriculture, tourism, hospitality, and entertainment sectors.
"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 added.
In the same context, the news website mentioned that Turkey’s recent boycott of all trade with the Israeli occupation entity has forced importers of construction materials to seek more expensive alternatives.
Before this move, according to The Times of Israel, businesses were increasing imports from Turkey as maritime trade disruptions caused by the Yemeni Armed Forces' operations in support of Gaza made goods from China and the Far East costlier.
"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," noted Amir.
He explained that "insurance tariffs are going up, costs are rising, and the government will need to raise taxes, such as VAT to fund war spending which in turn places a heavy burden on businesses."
When asked about the Israeli government's efforts to assist war-affected businesses, Amir referred to a CofaceBDI survey from January where 52% of managers said they received no assistance or inadequate support, despite meeting compensation criteria. Only 3% found the assistance satisfactory.
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