Written by Wyre Davis BBC News in Jerusalem
April 24, 2024
Image source, Getty Images
image captionJerusalem’s Old City would be packed with tourists at this time of year
More than half a year has passed since the devastating Gaza war, and the impact on the Israeli and Palestinian economies has been devastating.
Nearly all economic activity in the Gaza Strip has been destroyed, and the World Bank says the war has also hit Palestinian businesses in the occupied West Bank hard.
As Israelis celebrate the Jewish holiday of Passover, the much-vaunted “emerging market” is also poised to remain an attractive proposition for investors.
The cobblestone streets of Jerusalem’s Old City are eerily quiet. There are no long lines to visit sacred sites – at least not the ones that are open.
Just after Easter and Ramadan, in the middle of Passover, all four sides of the Old City are sure to be filled with tourists.
According to the country’s Central Bureau of Statistics, only 68,000 tourists arrived in Israel in February. This is a significant decrease from the 319,100 visitors in the same month last year.
It may be surprising that some visitors come to Jerusalem during such a tense time, but many of the travelers are religious pilgrims from all over the world who will have paid their travel expenses well in advance. .
Zack’s Jerusalem Gifts, one of the few shops on Christian Quarter Street in the Old City in occupied East Jerusalem, was open the day I passed by.
“We really only do online sales,” says Zach, whose business specializes in antiques and Bible coins.
“There aren’t really any people. Last week, after tensions between Iran and Israel rose, business was down again. So we’re just hoping for some big, big miracle to happen after the holidays.”
The Old City of Jerusalem is not the only place in need of a miracle.
Some 250 kilometers further north, on the volatile border between Israel and Lebanon, there has been near-daily firefights with Hezbollah since the start of the war in Gaza, forcing Israeli forces to close down much of the area. 80,000 residents have been evacuated further south. A similar number of Lebanese have been forced from their homes on the other side of the border.
Agriculture in this part of Israel is another sector of the economy that has been hit hard.
Ofer “Poshko” Moskowitz is not actually allowed to enter the avocado orchard in the Misgab Am kibbutz because of its proximity to the border. But every once in a while he ventures inside and wistfully walks among the trees, looking at all the “money on the ground.”
“We have to go to the orchard to pick it because it’s very important for next season,” Poszko says. “If we don’t harvest this fruit, the next season will be very bad.”
He says he is losing a lot of money because he can’t harvest his avocados. He says he will be paid around 2 million shekels ($530,000, £430,000) this season.
Image source, Getty Images
image captionIsrael’s agriculture is another part of the economy hit hard by the war
Although agriculture and tourism support the livelihoods of thousands of people, they make up a relatively small share of the Israeli and Palestinian economies.
So what does the broader picture tell us?
Ratings agency S&P Global last week downgraded Israel’s long-term rating, reflecting declining market confidence due to escalating tensions between Israel and Iran and concerns that the war in Gaza could spread to the rest of the Middle East. (from AA minus to A plus).
This loss of confidence is also reflected in the decline in Israel’s GDP (the total value of goods and services produced in the economy), which fell by 5.7% in the final quarter of 2023. But many Israelis say the country has fewer well-known tech companies and startups. This field has proven to be more “war-resistant” than expected.
The coastal city of Tel Aviv is just 35 miles from Jerusalem. More pertinently, it is probably less than 70 km from Gaza.
You could be forgiven for forgetting from time to time, even if only temporarily, that Israel is embroiled in its longest war since independence in 1948.
image captionPeople in Tel Aviv enjoying the beach
Families making the most of the early summer sun by surfing, couples having lunch at one of the many outdoor restaurants on the beach, and young people strumming their guitars in the green space between the coastal road and the Mediterranean Sea.
The backdrop is an economically active and physically rapidly growing city.
“They joke that Israel’s national bird should be a mechanical crane!” John Medved, founder and CEO of Our Crowd, an online global venture investment platform says this.
A charming character with an overwhelmingly upbeat worldview, Medved says, “In the first quarter of this year, almost $2 billion was invested in Israeli startups…We are on track for our best year ever. “I’m having one of those days,” he tells me. Those involved with Israel have not stopped engaging. ”
Despite everything, Medved insists that Israel remains an “emerging country” and a good option for would-be investors.
“There are 400 multinational companies operating here. Not a single multinational company has closed down operations in Israel since the war.”
Elise Brezis agrees with Medved’s assessment to some extent.
An economics professor at Bar-Ilan University near Tel Aviv acknowledged that Israel’s economy remains “remarkably resilient” despite last quarter’s GDP figures.
“When it comes to tourism, yes, exports are down, but imports are also down,” Bregis said. “The fact is that the balance of payments is still in good shape. What’s so troubling about it is that the data doesn’t give the impression that Israel is in such a bad situation.”
But Professor Brezis detected a broader recession in Israeli society that was not reflected in the economic data.
“Israel’s economy may be strong, but Israeli society is not strong at the moment. It’s like looking at a person and saying, ‘Wow, his salary is high’ (…) But in reality He’s depressed. And he’s thinking, ‘What am I going to do with my life? -That’s exactly what Israel is like now. ”
If the outlook for Israel is mixed, the outlook for the Palestinians beyond the separation wall separating Jerusalem and Bethlehem is overwhelmingly bleak.
image captionTourism to Bethlehem’s Church of the Nativity “immediately stopped” after Hamas attacked Israel last October
Tourism is particularly important to the economy of towns like Bethlehem in the occupied West Bank.
Some people head to the site in Jerusalem where Christians believe Jesus was born, but Dr Samir Hazbun of the Bethlehem Chamber of Commerce said tourists had “immediately stopped” since October 7 last year.
It was then that Hamas triggered the current war by attacking Israeli communities near Gaza, killing about 1,200 people, mostly civilians, and taking about 250 hostages.
There is great dependence and dependence on the Israeli economy, but Israel has effectively closed off the landlocked West Bank since October 7, which has made life and work dire for many Palestinians. Dr. Hasbun says it is having an impact.
“The Borough of Bethlehem is currently closed,” he said. “There are about 43 gates[in Israel’s security barrier]but only three are open, which means between 16,000 and 20,000 Palestinian workers from our region are in Israel. They immediately lost their income.”
According to the Chamber of Commerce, local Palestinians working in Israel generate 22 billion shekels ($5.8 billion) a year.
“You can imagine the economic impact,” Dr. Hasbun said. He is particularly concerned about the future of young Palestinians the longer the war drags on and the economies of Israel and the West Bank are divided.
“Today’s young generation is unemployed and not working. Many of them are talented,” he laments.
“We expect about 30,000 new graduates to emerge from Palestinian universities in June. What will they do?
In Gaza itself, the economy has been completely destroyed by six months of war. According to the Hamas-run Health Ministry, Israel’s relentless air strikes and ground operations have killed 34,183 people, mostly women and children.
While there is optimism that some parts of Israel can weather the storm and continue to attract investors, there is little hope that things will return to some sort of normality in the West Bank and Gaza.
