Against the backdrop of the ongoing Swords of Iron War, the annual report on foreign investments for 2023 was published today (Tuesday) by the Chief Economist Division at the Ministry of Finance. The report aims to review findings based on foreign investment transactions from the division’s database, as well as insights derived from an analysis of OECD data on direct foreign investments, based on actual capital flows.
Israel stood out in 2023 due to Intel’s massive investment
The Chief Economist at the Ministry of Finance, Dr. Shmuel Abramzon, highlighted that, according to the report, the volume of transactions in Israel in 2023 stood out positively, thanks to Intel’s major investment in expanding its Kiryat Gat plant, valued at approximately $15 billion. However, in the fourth quarter, following the Swords of Iron War, transaction volume was affected. As of 2024, a positive trend in the growth of foreign investment transactions in Israel can be observed, with the strengthening security system expected to further support this positive trend. According to Dr. Abramzon: “The Ministry of Finance continues to work, even during this period, to expand Israel’s investment agreements to create a supportive environment for increasing investments and enabling a diversification of available investment sources for the Israeli economy.”
Preliminary data for 2024
The value of foreign investment transactions in Israel during the first half of 2024 amounts to approximately $11.8 billion:
First quarter: Approximately $4.4 billion with around 460 transactions.
Second quarter: Approximately $7.4 billion with around 450 transactions of higher value.
This transaction volume is about 15% higher compared to the first half of 2022 and 28% lower compared to 2023 (including Intel’s transaction). In terms of the number of transactions, there was a decrease of approximately 27% compared to 2022 (indicating a relatively high average transaction value in 2024), but a 16% increase compared to 2023.
Swords of Iron War Increased transaction volume versus decreased numbers
In the context of the “Iron Swords” war, 2023 saw a decline of approximately 29% in total foreign investments entering Israel compared to 2022. This was due to the impact of the fourth quarter of that year, following the outbreak of the war, which led to a disruption in Israel’s economic activity and difficulties in attracting investments during a time of uncertainty. The number of transactions in 2023 significantly dropped to 1,563 compared to 2,502 in 2022 – a decrease of approximately 62%.
Despite this, according to the database of foreign investment transactions from the Chief Economist Division, in 2023 overall, the volume of foreign investment transactions amounted to approximately $32.9 billion – a 40% increase compared to 2022.
Key transactions in 2023: Intel’s corporate deal to expand the Kiryat Gat plant, valued at approximately $15 billion; the merger deal of Imperva with the French corporation Thales SA for approximately $3.6 billion; and Adani Group’s investment in Haifa Port, valued at approximately $1.2 billion. Additionally, data from the report indicate that nearly half of the transaction value this year was in the semiconductor and chip industry, approximately 30% in deals with IT companies, and 16% in companies operating in the life sciences sector.
