https://sputnikglobe.com/20240530/for-a-fistful-of-shekels-israeli-defense-contractors-profits-boom-as-economy-takes-a-beating-1118702741.html
For a Fistful of Shekels: Israeli Defense Contractors’ Profits Boom as Economy Takes a Beating
Sputnik International
2024-05-30T14:22+0000
economy
business
bloomberg
central bank
rafael advanced defense systems
With the world watching in horror as the raging Palestinian-Israeli conflict approaches its eight-month anniversary, arms makers have made a tidy profit in the tens of billions of dollars. Israel’s defense sector has been no exception.
US business media has warned of the “haunting parallels” between Israel’s ballooning military expenditures amid the Gaza War and the country’s 1970s ‘lost decade’ of surging inflation, out of control budget deficits, stagnant growth, and faltering investor confidence. Israel’s top three defense giants – Israel Aerospace Industries (IAI), Rafael Advanced Defense Systems, and Elbit Systems have enjoyed surging stock prices and orders growing at a pace beyond their ability to keep up.
With the world watching in horror as the raging Palestinian-Israeli conflict approaches its eight-month anniversary, arms makers continue to quietly make a tidy profit from the war. Israel’s domestic defense sector is no exception.
Israel’s Central Bank expects the war in Gaza to cost a whopping 250 billion shekels ($67.4 billion US) through 2025, as defense spending as a share of GDP jumps from 5.3% to 9%. That’s amid increasingly dour circumstances in the civilian economy, with Q4 of 2023 seeing Israel’s GDP drop by over 20%, while consumption dropped 27% and investment by 70%.
Most worrying of all for Tel Aviv is the potential loss of investment flows – particularly in the tech sector. “We can’t even begin to measure how many people have decided not to invest in Israel in the short term, let alone on a permanent basis,” Shoresh Institute economist Dan Ben-David told Bloomberg in a report published Thursday.
But as the civilian economy suffers, Israel’s arms makers have no complaints, boasting record profits, buoyed by Washington’s nod to an unprecedented $17 billion in new military aid. A portion of the funds can be spent on Israeli-made weapons, with roughly half a billion dollars typically slated for Israeli-US joint research in missile defense.
Israel’s top three defense giants – Israel Aerospace Industries (IAI), Rafael Advanced Defense Systems, and Elbit Systems have seen surging stock prices and orders growing at a pace beyond their ability to keep up.