Foreign investments in Israel cut by half in 2014

Palestine Information Center – June 25, 2015

NAZARETH – Foreign direct investment (FDI) in Israel dropped by nearly 50% in 2014 compared to 2013, a report by the United Nations Conference on Trade and Development (UNCTAD) reveals.

The report tracks a sharp decrease in percentages of foreign investments in Israel. In 2014 $6.4 billion were invested in Israel, whereas in 2013 $11.8 billion were invested – a decline of about 46%.

Moreover, Israeli FDI investments abroad also decreased from $4.67 billion in 2013 to $3.97 billion, a decrease of 15%. These figures are significantly lower than the corresponding figures from 2007 to 2005, before the outbreak of the financial crisis in 2008.

“We believe that what led to the drop in investment in Israel are Operation Protective Edge [in reference to Israel’s military aggression on blockaded Gaza] and the boycotts Israel is facing,” Roni Manos of the College of Management and one of the authors of the report’s summary told Ynet.

According to Manos, there is another reason for the decline.

“In the past there were large transactions such as Waze and ISCAR Metalworking which boosted investment, but over the past year there were not enough such deals.”

According to the UN report, world FDI investments during the past year amounted to only $1.23 trillion, a 16% drop compared to 2013 ($1.47 trillion dollars).

The main reason for this, according to the report’s authors, is weak global economic growth and uncertainty regarding economic and business policy in many countries, which deterred many investors. Among others, the uncertainty due to the rate of quantitative easing in the US and Europe, the Greek debt crisis and its impact on stability in the Eurozone, and the pace of economic growth in China.

Other factors influencing the decline in global FDI were geopolitical risks such as the conflict in Ukraine, which has calmed down in recent months, the worsening of relations between the West and Russia, and revolutions and regime changes in several countries in the Middle East.