The Impact of the Gaza War on Israel's Economy
The ongoing conflict in Gaza has significantly affected Israel's economy, as highlighted by a recent report from the Israeli economic newspaper Globes. The war has prompted a notable shift in investment patterns among Israelis, with a marked increase in funds directed towards U.S. stocks, particularly the S&P 500 index. This trend has more than doubled, reflecting a broader concern about the economic stability within Israel amidst the turmoil.
Shift in Investment Strategies
According to Globes, over half of the new investments made by Israelis since the onset of the Gaza war have flowed into American stocks. An analysis by Index Research and Development revealed that last year, 75 billion shekels (approximately $20 billion) were invested in the Israeli pension market, with a significant portion—41 billion shekels—going into funds tracking the S&P 500. This marks a dramatic increase from three years ago when only 1% of long-term investments were directed towards the American index, indicating a shift in investor confidence and strategy.
Concerns for the Future
Financial experts warn that this outflow of savings could pose a greater threat to the Israeli economy than to individual investors. A source from an unnamed financial institution expressed concern that the trend of investing abroad undermines local economic growth. With foreign investments dwindling due to the ongoing conflict, the reliance on domestic investments becomes crucial. The source emphasized that if Israelis do not invest in their own economy, it could lead to a decline in the financial resources available for necessary infrastructure and company development in the future.
