Jakarta, CNBC Indonesia – Israel’s industrial and technology sectors will likely find it difficult to recover. Especially, after the large-scale war with the Palestinian Hamas group which erupted again last weekend.

Investors and analysts assess that the global economic slowdown has caused funding to fall sharply in Israel this year. In fact, Israel itself is a country with the most innovative technology industry in the world.

At least 14% of the country’s workforce depends on the technology sector. Nearly one-fifth of the country’s economy is supported by the growth of this sector.

However, funding to Israel slowed this year due to global economic uncertainty. When conditions started to turn positive, conflict suddenly occurred.

“Overseas investment will slow in the coming weeks and months, especially if hostilities persist,” said Jon Medved, Chief Executive of OurCrowd, one of Israel’s largest venture capital firms, quoted by Reuters, Wednesday (11/10/2023) .

Furthermore, according to him, now is not an easy time for Israel to get investment. In fact, flights to Israel have also been cancelled.

Israel declared war on the Palestinian militant group Hamas after gunmen on Saturday (7/10) stormed the Gaza border fence.

Israeli media said deaths from the attacks had reached 900, most of them civilians shot dead in their homes.

Meanwhile, a number of Israeli citizens and several foreigners were taken to Gaza as hostages. Israel responded with fierce air strikes on the Hamas-controlled Gaza Strip.

Before the conflict, investment in Israeli tech startups had declined as the global economy slowed, the collapse of Silicon Valley Bank (SVB) eliminated a key funding source and proposed legal overhauls threatened the foundations of corporate law and intellectual property rights.

Previously, investors and analysts also warned technology companies operating in Israel to strengthen their security defenses. They predict that there will be disruption in the technology sector.

As a result of the Hamas-Israel conflict that broke out last week, many business operations were closed. The Israeli New Shekel currency fell to its lowest level in almost eight years against the US dollar earlier this week.

Tel Aviv’s main stock index fell as much as 7% and government bond prices dropped as much as 3% in the market’s initial response to the bloodiest attack on Israel in decades.

“This is a big disruption for business,” said Jack Ablin, CEO and co-founder of Cresset Wealth Advisors, quoted by Reuters, Monday (9/10).

According to him, if this conflict continues, it could be that many workers in technology companies will be assigned to serve as military troops.

Chief Global Strategist at LPL Financial Quincy Krosby said technology companies operating in Israel need to mobilize efforts to protect their facilities from ongoing attacks.

[Gambas:Video CNBC]

(fab/fab)