Chaos in Israel... Tech Industry Deal Performance Hits 'Lowest in 10 Years'

Transaction Volume of 9.9 Trillion Won Halved Last Year

Amid ongoing clashes between Israel and the Palestinian armed faction Hamas, smoke rises from an Israeli airstrike in the Gaza Strip on the 6th (local time). [Image source=AFP Yonhap News]

Bloomberg reported on the 6th (local time) that mergers and acquisitions (M&A) and initial public offering (IPO) performances in the technology industry, which has supported the Israeli economy, have sharply declined to the lowest level in 10 years.

According to consulting firm PwC, the total transaction volume of Israeli technology companies this year, including M&A and IPOs, recorded $7.5 billion (approximately 9.9 trillion KRW). This is a decrease of more than half (56%) compared to last year’s $16.9 billion in transactions. The number of deals was 45, marking the lowest in 10 years.

Amid recent international turmoil and rapidly spreading economic crisis concerns, the technology industry that has supported the Israeli economy is experiencing a rapid contraction. With high interest rates and economic recession reducing market liquidity, internal political situations and geopolitical uncertainties have highlighted, causing investment sentiment toward Israeli startups to freeze sharply.

In Israel, months of intense protests have continued after the Benjamin Netanyahu government pushed through legislation to weaken the judiciary’s authority. Amid this, on the 7th of last month, Hamas, the Islamic militant faction in the Palestinian Gaza Strip, launched rockets into major areas of Israel, initiating military conflict between Israel and Hamas. The war, which has lasted over two months, has dealt a direct blow to the Israeli economy. As the Israeli government has mobilized unprecedented reservists and thousands of technical personnel have joined the military, companies are experiencing labor shortages, exacerbating the chaos.

The technology industry plays a crucial role, accounting for more than half of Israel’s exports and 18% of its gross domestic product (GDP). Yaron Weizenblau, an Israeli analyst at PwC, said, "Due to the impact of the war with Hamas, Israel’s technology industry is likely to become more vulnerable," adding, "It is difficult to predict the direction of the war, but regardless of the outcome, it will have a significant impact on Israel’s economy and future."

Earlier, the Israeli Ministry of Finance announced on the 22nd of last month that the economic loss due to the war with Hamas is estimated at $270 million per day. The Israeli government recorded a fiscal deficit of 22.9 billion shekels (approximately 8 trillion KRW) last month alone due to rapidly increasing military expenditures. With the rise in military spending, fiscal expenditures are expected to increase significantly, and borrowing is projected to nearly double from 5% of last year’s GDP to around 10% this year.

This content was produced with the assistance of AI translation services.