since Balfour Declaration 1917, he started Zionist project It takes its political and economic form, supported by the Great West forces that saw the establishment of a state of Jews on the ground Palestine A solution to the “Jewish problem” in Europe by displacing the Jews of the world to Palestine after its people were expelled from it.
With the announcement of the establishment of the State of Israel in 1948 on the usurped Palestinian soil, the Israeli economy began to be formed according to a studied strategy that mixes Western support, militarization, technology, modern agriculture, industry, immigration, and financial sector.
Israel has succeeded in building a coherent economy that supports the “Jewish superiority” narrative, but the ongoing war that erupted in October 2023 put this economic model in front of harsh tests, which increased the entry into a war with Iran.
In this report, we will learn about the seven pillars that make up the Israeli economy, and the extent of its affected war for nearly two years.
First: super technology
The super technology sector in Israel represents about 20% of GDP, and is the main driver of economic growth in the country, as it contributes approximately 53% of the total exports, according to Reuters.
This sector also constitutes about a quarter of the state’s income tax revenues, whether from employees or companies, and accommodates 11.4% of the total workforce, according to the report of the Israel Innovation Authority on the employment of high technology for 2025, as reported by the “Times of Israel” newspaper.
About 600 new startups were established in 2023, while technology companies raised $ 8 billion in 2023, a decrease of 55% from 2022. In total, there are about 9,200 technology companies in a working force of 400,000 people, according to Reuters.
The impact of war on the sector
The Technology Sector in Israel has been greatly affected by the continuous war in about two years, and one of the most prominent negative effects is the following:
- Migration of competencies in the technology sector:
During the nine months that followed the Israeli aggression on Gaza, about 8,300 technology employees left the country, according to a report issued by the Israel Innovation. Since October 7, 2023, the number of departures per month has doubled, reaching its peak at 1207 individuals in one months, while more than 800 employees leave per month continuously, indicating an escalating bleeding in competencies, as stated by the TRT Global platform, quoting the report.
There is another source of the workforce in the advanced technology sector. About 7% of workers in this sector joined the reserve forces after the October events, which negatively affected the productivity of the sector, according to the Arab Center in Washington.
- Poor and its impact on the technology sector
The position and reputation of Israeli companies due to the horrific crimes against the Palestinian people in Gaza, and a poll conducted by the Israeli advanced technology industries company on the impact of the Israeli war on Gaza on the Strip revealed that 65% of the investment capital funds face operational difficulties due to their association with an Israeli identity in light of the escalation of criticism and negative positions globally.
More than 30% of Israeli startup companies and companies also reported that they have transferred a large part of their activities abroad, amid fears of the exacerbation of this trend during the next year, according to Reuters.
- Lack of financing and the collapse of startups
Emerging companies in Israel witnessed an unprecedented crisis, as a result of the repercussions of the war in Gaza and the decline in the global investment environment. The capital flows have almost collapsed, which led to a rapid collapse of a large number of companies that were considered the stars of the Israeli technology sector, especially those that were based on new financing rounds after consuming previous investments, according to the Israeli newspaper “Haaretz”.
Second: Military Exports
The Israeli military industry is a major part of the Israeli economy, and Israel is considered one of the main players in the global arms market, and has a strong reputation in the fields of innovation and technical quality.
The annual Israeli arms sales reached a record in 2024, for the fourth year in a row, when the value of exports was twice as to 5 years ago, according to the figures of the Israeli Ministry of Defense.
The ministry stated that the total defense exports amounted to about 14.8 billion dollars last year, an increase of 13 billion in 2023. Between 2018 and 2020, this number ranged between 7.5 and 8.5 billion dollars, according to the “Times of Israel” newspaper.
The air defense systems, missiles and shells constituted the largest part of exports by 48%, up from 36% in 2023, according to the ministry’s figures.
War
The Israeli military industries sector is almost the only sector that has benefited positively from the war, as security conditions have contributed to strengthening the demand for defense systems locally and internationally, which strengthened the Israel site as a major arms source.
However, the sector began to be influenced by the Israeli massacres in Gaza, and officials in Israel expressed their increasing concern that some governments, especially in Western Europe, cancel arms deals with Israel, or impose sanctions on Israeli defense companies because of the war in the Gaza Strip, and recently, Spain canceled the purchase of anti -tank missile systems worth 285 million euros from a subsidiary company For Rafael Israeli defense, according to the previous source.
Third: Industry
In addition to advanced technology and military industries, Israel is characterized by an active industrial sector, especially in the jewelry and medicine industry, according to the “Recilenk Company” platform.
- Jewelery (diamond)
Israel is a global player in the diamond market, with exports exceeding $ 9 billion, compared to 6.73 billion imports. And come India At the head of the Raw Diamonds of 1.2 billion dollars annually, while it is formed US The largest market, as about 50% of diamonds are imported in dollars from Israel. The Israeli Diamond Stock Exchange is a global center through which a third of the raw diamond trade passes annually, and the country is famous for developing advanced techniques in polishing diamonds.
- Medical and medical devices industry:
Israel hosts about 700 medical devices, producing various equipment that includes ultrasound and nervous stimulation for Alzheimer’s treatment. The most prominent pharmaceutical companies include: Tafaa, Taru, Orkam, Eurogen Pharma, Carava, and Midi Wind, according to Recilenk.
The impact of war on the sector
- Diamond IndustryThe diamond trade in Israel decreased sharply in 2024, according to a report issued by the Israeli Ministry of Economy and Industry, and Israel’s raw diamond exports amounted to about $ 635 million last year, a decrease of 24.1% from the year 2023, while polished diamond exports decreased by 35.7% to $ 1.87 billion, as reported by the Chinese “Xinhua” agency.
- PharmaceuticalThe sector has been significantly affected by the continuous war for nearly two years, as supply chains witnessed significant turmoil, especially with many international airlines stopped running their flights to Israel. The summons of large numbers of workers in the pharmaceutical and medical equipment sector to military service also contributed to reducing the production capacity.
Recently, the Israeli company “Tiva” (an Israeli international pharmaceutical industries company registered in the Bursa announced New YorkSuddenly, plans to lay off about 8% of its operating power by 2027, with the aim of reducing costs by $ 700 million. Since the beginning of the year 2025, the price of “Tiva” fell by 23%, to settle its market value at 19 billion dollars, according to the “Globes” platform.
Fourth: Energy Sector
The Israeli energy sector consists of a mixture of traditional and renewable sources, as natural gas plays a major role in generating electricity, while renewed energy, especially solar energy, is noticeable growth. The total electrical capacity in the country is 23.9 GB, as private sector energy producers have a market share of 53.3%.
War
The Israeli Bazan Group -and its headquarters Haifa– All refining facilities were closed after the refinery was severely damaged in an attack by Iran, adding that the Iranian attack killed 3 company employees, according to Reuters.
Israel also stopped production in the Tamar field and the Levitehan Maritime field, and the last is its largest field for natural gas run by Chevron; For security reasons, according to a statement issued by the Israeli Ministry of Energy, Bloomberg reported.
Fifth: Agriculture
The agricultural sector in Israel is very developed and technological, and plays a pivotal role in food production. Israel is one of the main issuers of fresh products, including fruits and vegetables, and is globally characterized by its innovative agricultural techniques.
Although it does not achieve a full self -sufficiency in food production, it produces a large part of its local needs, as it produces approximately 70% of its food needs, according to the Goethe Institute in Frankfurt, and it also exports large quantities of agricultural products to international markets.
War
The war caused a severe blow to the Israeli agricultural sector, as crops were left without fairy or harvest, to rot in the fields and wither on the trees. The Director General of the Israeli Ministry of Agriculture and Rural Development, Oren Lavi, described the situation as “the largest crisis facing agriculture in the State of Israel since its establishment in 1948”, according to the Spanish newspaper “Elbais”.
The country also left thousands of foreign workers, most of them from Thailand, Nepal and Tanzania. As for the daily Palestinian workers, who form the other major workforce, the entry permits for Gaza residents have been canceled, and workers’ permits were suspended West Bank.
Several Israeli farmers have also been evacuated to safer areas inside the country, or they were called to serve in the reserve forces. As a result, agricultural lands have become deserted, and tractors are suspended, with a heavy silence that only the sound of the shelling is cut off.
Sixth: Tourism
Tourism was one of the vital pillars of the Israeli economy, as it ranked fifth among the largest export sectors, and achieved revenues estimated at 40 billion shekels (10.7 billion dollars), forming 7% of the total national exports.
The sector reached its climax in 2019, when Israel received 4.9 million international tourists, the highest number in its tourism history, which directly contributed to supporting the services and jobs associated with hospitality, transport and retail, according to the Hebrew “Wi -Net News” platform.
War
Israel has announced an “unprecedented decline” in tourism revenues with losses of $ 3.4 billion since the war on Gaza erupted in October 2023. The figures issued by the Israeli Ministry of Tourism showed that the number of arrivals tourists has declined by more than 90% since the beginning of the war.
The Israel Hotels Association said that the rates of hotel occupancy decreased to 10% in some areas, considering that the level of this decline is “historic”, compared to about 80% in previous years.
Seventh: Financial Services
The banking system in Israel is dominated by local banks, which is a highly concentrated system, and plays an important role in the financial sector and credit markets. The banks in Israel are responsible for about 50% of companies ’credit and 70% of families’ credit.
The financial system in Israel has witnessed fundamental transformations during the past two decades, the most prominent of which is the decrease in the bank’s lending share from 70% in 2004 to 50% currently, as well as the decline in its lending share for individuals from 80% to 70% during the last 5 years, despite its continued semi -full control of the mortgaging market.
A comprehensive report published by the Bank of International Settlements indicates that the percentage of private debt to gross domestic product in Israel It is among the lowest compared to developed countries, which gives decision makers a margin of flexibility in supporting Economic growth Without endangering financial stability.
War
The war caused the Israeli economy heavy losses as a result of the decrease in foreign and local investments, and according to the Israeli Research Center (IVC), the number of transactions between Israeli companies and foreign investors decreased by 42% in 2024 compared to 2023.
And foreign direct investment in Israel decreased by 29% in 2023, with the ownership of the global funds of Israeli stocks decreased to its lowest level in a decade. The three major credit rating companies have reduced; Credit rating Long -term for Israel, which is used by banks, financial institutions and investors to assess the risk of investment in companies, according to The Workr platform.
It is also revenue Bonds Israeli is the highest in 13 years, with bond returns when investors see that investment is more dangerous, and thus seeks higher returns, and shareholders determine high bond returns when they are in urgent need of huge amounts of money. The high revenue of Israeli bonds reflects the decline in investor confidence in their economic stability, according to the previous source.