The 73-year-old can look forward to a healthy economic legacy, as the economy has survived the turbulence of several years of political turmoil unscathed. A recession will likely be avoided, says Bank of Israel Governor Amir Yaron. Growth will also be stronger than in the United States and Europe. The unemployment rate is just over three percent.
Although the cost of living is high because monopolies dominate in many areas, there is currently no sign of escalating inflation. The inflation rate is a moderate 4.6 percent.
However, the next coalition will inherit one problem: Israel’s high-tech industry, which has been spoiled by success, has come under pressure. When tens of thousands of employees were laid off in the USA, people in Israel were still hoping for better times. But now the crisis has reached the country. Alibaba and Snap have closed their development centers, and many high-tech companies have reduced their staff by 50 percent.
Raising capital has become more difficult compared to the previous two years when Israel’s tech companies were flooded with capital. At that time, the serious shortage of workers was still the biggest problem, today the companies have to lay off employees.
The hype is over for now. But at least on one point, industry experts give the all-clear. Her assessment is that while the new government is implementing radical domestic and foreign policies, this will not exacerbate the tech crisis.
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All governments have agreed for half a century that innovation, technology and research and development are Israel’s competitive advantage, Uri Gabai told the Handelsblatt. The head of the “Start-up Nation Policy Institute” (SNPI) continued: “We are sure that this consensus will remain, no matter who governs the country.”
The big issue now is not Israeli politics, but raising capital, says Eyal Goldman, who advises tech companies. The Israeli high-tech industry has shown in recent years how resilient it is – regardless of the election results. In 2021, for example, when a new government had to be appointed for the fourth time in just a few years, a record sum of 26 billion dollars was acquired for investments and more than 30 new unicorns were founded.
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The Israeli entrepreneur and innovation consultant Gilad Carni is also convinced that the election result will have no impact on Israel as a tech location. Netanyahu has always supported the high-tech industry in all his years as finance minister and head of government. In addition, no government would dare to attack the most lucrative sector of the Israeli economy.
After all, he stands for more than half of exports and almost 20 percent of national product. And despite the current symptoms of the crisis, there are already signs of a new dynamic, sparked by the world’s trouble spots: A significant proportion of tech companies are directly or indirectly involved with the defense industry, whose products are in greater demand given the current world situation.
However, a large part of the population fears that right-wing extremist parties entering the government could not only jeopardize the rule of law and democracy, but also coexistence with the Arab minority, which makes up around 20 percent of the population. Many fear that this could lead to new outbreaks of violence.
Amir Mizroch from the tech communications company Orange Grove also believes that Netanyahu’s election victory will not trigger any euphoria in the tech scene. Even if the economic prospects were not clouded by this: Many founders and IT experts are left of the center and alienated from the political messages of those parties that will be in charge in Israel in the future.
In the longer term, however, Mizroch sees another danger: the future government does not want to force the orthodox school system to include basic knowledge such as English and mathematics in the curriculum. Netanyahu promised the Orthodox to give them a free hand. The outgoing Prime Minister Lapid had threatened to cut their grants if they banned science and English.
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