Warnings grow over economic crisis threatening Israel’s export, tech sectors: Report

Warnings have intensified in Israel over a looming economic crisis threatening the country’s export and technology sectors as the shekel climbs to its strongest level against the US dollar in more than three decades, according to local media reports.

The Times of Israel daily reported Friday that the shekel is currently trading at around 2.9 to the US dollar, its highest value since October 1993.

According to the newspaper, the appreciation of the Israeli currency “threatens to erode major growth engines of the country’s economy,” while the government of Prime Minister Benjamin Netanyahu has remained publicly silent on the issue.

Exporters, tech firms under pressure

The report said the Bank of Israel has not yet intervened in currency markets despite rising warnings from the business sector.

Exporters and technology companies “earn their money chiefly outside Israel and are paid in dollars. But they pay workers’ salaries, overhead costs, taxes and other expenses in shekels, which have become more expensive due to the strength of the local currency,” the newspaper said.

The Manufacturers Association of Israel (MAI) estimates export losses linked to the strong shekel could exceed 31.5 billion shekels ($10.9 billion) by the end of the year, alongside about 3 billion shekels ($1 billion) in lost tax revenue.

Exports account for about 40% of Israel’s economic activity, according to data from the country’s Central Bureau of Statistics.

Central bank acknowledges impact

Bank of Israel Governor Amir Yaron said earlier this month that the shekel’s 20% rise against the US dollar over the past year had hurt exporters’ profitability, according to the report.

However, he said the currency’s strength reflected “investor optimism” tied to a ceasefire between the US and Iran, strong capital inflows, and the resilience of the Israeli economy despite nearly three years of near-constant war.

The Times of Israel reported that exporters and technology manufacturers “are warning, with growing intensity, that the strong shekel is putting that resilience at risk.”

Calls for interest rate cuts

MAI president Avraham Novogrocki on Thursday urged the Bank of Israel to take immediate action and lower interest rates. “We are losing our technological advantage that was built over decades,” he warned.

Exporters also called on the Finance Ministry to introduce aid packages and economic incentives “to make Israel attractive for business operations and investments,” according to Novogrocki.

Israeli businessman Liad Agmon wrote Wednesday on US social media company X that companies in which he is invested “are making advanced plans to move operations out of Israel. Industrial export companies are close to the brink of bankruptcy.”

“A lot could be done about the situation,” he added, expressing regret that there is no leadership in Israel.

Technology labor market expert Dror Litvak said Israel’s high-tech sector may be among the most vulnerable to the stronger currency “because most of its revenues are in dollars while a large portion of its expenses — especially wages — are in shekels.”

Reasons behind shekel’s rise

In April, Israel’s Channel 12 claimed the shekel’s gains were driven partly by “optimism over Israel’s geopolitical position, including prospects for a lasting ceasefire with Iran and ongoing talks with Lebanon.”

The channel also cited the “high-tech economy” as another factor behind the decline of the dollar against the Israeli currency.

The Bank of Israel said in its 2025 annual report, published in March, that the Israeli economy lost 8.6% of annual gross domestic product, or 177 billion shekels ($57 billion), during 2024 and 2025 due to the Gaza war.

Israel has continued violating the Gaza ceasefire agreement that took effect on Oct. 10, 2025. Israeli attacks and gunfire since then have killed 846 Palestinians and injured 2,418 others, according to Gaza’s Health Ministry.

The ceasefire agreement was reached after two years of an Israeli genocidal war launched on Oct. 8, 2023, which killed more than 72,000 Palestinians, injured over 172,000 others, and caused massive destruction to 90% of civilian infrastructure across Gaza.

*Writing by Mohammad Sio in Istanbul