Israeli economy, tech sector sustain massive fallouts amid war on Gaza

By Al Mayadeen English
Source: New York Times
10 Jan 2024 21:40
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The mobilization of 350,000 army reservists disrupted the normal functioning of various business sectors, including the tech sector, construction, and tourism.

Palestinians burn Israeli flags, during the observance of a global day of boycotts and strikes called for by pro-Palestinian activists to demand a cease-fire in Gaza, at Bourj al-Barajneh Palestinian refugee camp in Beirut, Lebanon, Monday, Dec. 11, 2023. (AP)

In the aftermath of the October 7 events, Israeli company UBQ Materials which specializes in converting household waste into a plastic alternative has borne the brunt of the war on Gaza.

The New York Times reported on Wednesday that UBQ Materials had to shut down its plant, located just 20 miles from the Gaza border, following the launch of the resistance operation Al-Aqsa Flood. The operation left the workforce in shock as it claimed the lives of two employees and displaced many others, with some relocating up to 100 miles away.

Established in 2012, UBQ Materials, known for its innovative technology, resumed operations within three weeks. However, the ongoing effects of the operation continue to pose challenges for the company and other businesses in terms of operations and finances.

Beyond the visible impacts on UBQ Materials, the conflict has dealt a less apparent blow to "Israel's" economy. The report notes that the tourism industry has suffered immensely, while a significant increase in government spending has been noted, as well as a heavy dip in confidence within the technology sector, a key driver of the regime's economy.

The mobilization of 350,000 army reservists disrupted the normal functioning of various business sectors, with a survey conducted by the Israel Innovation Authority and the Start-Up Nation Policy Institute revealing postponed or canceled customer orders. Investors, too, exhibited hesitancy in the face of the challenges posed by the war.

The Organization for Economic Cooperation and Development (OECD) predicts a "temporary but pronounced slowdown" in "Israel's" economy as a result of the war. The growth rate, which stood at around 3 percent before the October 7 attacks, is now expected to decelerate to 1.5 percent this year. Factors contributing to this economic downturn include labor shortages, diminished consumer and business confidence, and elevated inflation.

Foreign investment, already weakened before October 7 due to political uncertainties, adds another layer of concern. Jonathan Katz, a former economic forecaster in the Israeli Finance Ministry, points to the existing disputes between Prime Minister Benjamin Netanyahu's extremist government and "Israel's" Supreme Court as a factor influencing the investment climate.

The construction sector, representing 14 percent of "Israel's" economy, grapples with a slowdown primarily attributed to a shortage of labor. Despite volunteer efforts, the departure of foreign workers and the absence of Palestinian labor have led to the wastage of fruit and vegetables in fields.

Furthermore, certain imports are facing shortages due to attacks led by the Yemeni resistance in the Red Sea in support of Palestinians in Gaza.