Israel's economic concerns are growing amid rising geopolitical tensions and ongoing military conflicts, reflecting the profound impact of these crises on various vital sectors.
Recent data indicates that the cost of insuring Israel’s debt against default has risen to unprecedented levels.
This cost hit its highest levels since the wake of the October 7 Hamas attack last year, data from S&P Global Market Intelligence showed.
Israel's five-year credit default swaps (CDS) have risen to 149 basis points, from Friday’s close to 146 points, the highest level since Oct. 23 last year, according to Reuters.
A credit default swap is a financial instrument that allows an investor to transfer credit risk to another party, acting similar in nature to an insurance contract.
This CDS value translates to an implied probability of default of 2.41%, based on a presumed recovery rate of 40%.
The recovery rate represents the percentage of the bond's face value that investors expect to recover in the event of a default.
Meanwhile, Israel's tech sector has remained resilient during a year-long war with Hamas but as it relies on large companies and foreign investment, the sector faces funding uncertainty that could harm the broader economy, a government report showed on Monday.
Since the war began on Oct. 7, Israeli tech firms raised some $9 billion - third behind Silicon Valley and New York, according to the state-funded Israel Innovation Authority (IIA).
“The level of investment was pretty much the same as the same period before the war,” Dror Bin, CEO of the IIA, told Reuters.
“So despite the fact that risk went up for investments in Israel, they still see the potential of those startups, and they continue to invest in them,” he added.
High-tech drives Israel's economy and accounts for 16% of employment, more than half of Israel's exports, a third of income taxes and 20% of its overall economic output.
