1 00:00:00,120 --> 00:00:03,000 Speaker 1: Over the last three decades, Israel has seen its economy 2 00:00:03,080 --> 00:00:06,520 Speaker 1: undergo a meteoric rise. Much of it has been fueled 3 00:00:06,519 --> 00:00:10,400 Speaker 1: by the explosion of its startup and tech sector, including 4 00:00:10,680 --> 00:00:15,520 Speaker 1: companies like the one where Tamar Saucerdoiti works. In the 5 00:00:15,520 --> 00:00:18,360 Speaker 1: early days of October, Tamar was working as the chief 6 00:00:18,360 --> 00:00:22,200 Speaker 1: of staff for a legal tech startup called Darrow, unaware 7 00:00:22,320 --> 00:00:24,880 Speaker 1: of how radically her life was about to change. 8 00:00:25,120 --> 00:00:27,880 Speaker 2: On October seventh, we all woke up to kind of 9 00:00:27,880 --> 00:00:29,720 Speaker 2: a complete shock. I was in my apartment in Tel 10 00:00:29,720 --> 00:00:32,959 Speaker 2: Aviv with my fiance when all of a sudden, sirens 11 00:00:33,000 --> 00:00:34,760 Speaker 2: went off, and very quickly we realized that there was 12 00:00:34,760 --> 00:00:35,760 Speaker 2: something big going on. 13 00:00:39,360 --> 00:00:43,080 Speaker 1: Hama's militants had stormed across the border into Israel and 14 00:00:43,159 --> 00:00:46,479 Speaker 1: carried out a series of attacks. Twelve hundred people were 15 00:00:46,560 --> 00:00:49,920 Speaker 1: killed and over two hundred were taken hostage, according to 16 00:00:49,960 --> 00:00:54,280 Speaker 1: local officials. As the news came in, Tamar started to 17 00:00:54,320 --> 00:00:55,680 Speaker 1: worry about her colleagues. 18 00:00:56,080 --> 00:00:58,160 Speaker 2: My job, as you can understand, as the chief of staff, 19 00:00:58,200 --> 00:01:00,400 Speaker 2: is very wide, so I ideal with a lot of 20 00:01:00,440 --> 00:01:03,280 Speaker 2: people and with all the different teams. So initially we 21 00:01:03,400 --> 00:01:05,280 Speaker 2: just tried to make sure where everyone was and that 22 00:01:05,319 --> 00:01:08,559 Speaker 2: everyone was okay all of the employees, while while also 23 00:01:08,640 --> 00:01:11,880 Speaker 2: trying to personally deal with anyone who would potentially was 24 00:01:11,880 --> 00:01:14,240 Speaker 2: in the area are affected. That was kind of the 25 00:01:14,240 --> 00:01:16,080 Speaker 2: first day, and then the next week that ensued was 26 00:01:16,080 --> 00:01:17,720 Speaker 2: a bit of structured chaos. 27 00:01:18,240 --> 00:01:20,720 Speaker 1: Over the next few days, more than three hundred thousand 28 00:01:20,800 --> 00:01:23,280 Speaker 1: Israelis were called up from the reserves to serve in 29 00:01:23,319 --> 00:01:27,560 Speaker 1: the war. Among them were Tamar's company's CEO, half of 30 00:01:27,600 --> 00:01:31,160 Speaker 1: the company's executive team, and dozens of other employees. 31 00:01:31,680 --> 00:01:33,880 Speaker 2: It was just cut like they literally like, within twenty 32 00:01:33,880 --> 00:01:35,880 Speaker 2: four hours were unavailable. 33 00:01:35,640 --> 00:01:38,679 Speaker 1: So thirty five employees. How much of the company was. 34 00:01:38,640 --> 00:01:39,959 Speaker 2: That about forty percent. 35 00:01:43,120 --> 00:01:46,040 Speaker 1: As Tomorrow herself was quick to point out her company 36 00:01:46,120 --> 00:01:48,160 Speaker 1: is just one of many that has had to rapidly 37 00:01:48,200 --> 00:01:52,760 Speaker 1: and radically adapt to new wartime realities. Today on the show, 38 00:01:53,120 --> 00:01:56,720 Speaker 1: what the war in Gaza means for Israel's startup ecosystem 39 00:01:56,760 --> 00:02:00,760 Speaker 1: and how it may reshape the country's entire economy. I'm 40 00:02:00,800 --> 00:02:03,840 Speaker 1: your host, Sarah Holder, and this is the big take 41 00:02:04,000 --> 00:02:12,679 Speaker 1: from Bloomberg News. In the three months since the October 42 00:02:12,720 --> 00:02:16,160 Speaker 1: seventh Hamas attack on Israel, Israel and Hamas have been 43 00:02:16,240 --> 00:02:20,120 Speaker 1: at war and thousands of people have been killed. Israel 44 00:02:20,120 --> 00:02:22,919 Speaker 1: has lost over twelve hundred victims in the attack itself 45 00:02:23,200 --> 00:02:26,240 Speaker 1: and over five hundred soldiers. Since October seventh, according to 46 00:02:26,240 --> 00:02:30,560 Speaker 1: the Israeli military, Gaza has lost over twenty five thousand people, 47 00:02:30,880 --> 00:02:35,560 Speaker 1: mostly Palestinian women and children, according to the Gaza Health Ministry, 48 00:02:35,600 --> 00:02:38,960 Speaker 1: which is run by Hamas. It needs to be said 49 00:02:39,200 --> 00:02:43,120 Speaker 1: that while the economic toll for Israel is calculable right now, 50 00:02:43,560 --> 00:02:46,720 Speaker 1: and that's what we're discussing in this episode, the toll 51 00:02:46,760 --> 00:02:51,280 Speaker 1: for Gaza continues to mount. Their economy and their infrastructure 52 00:02:51,600 --> 00:02:55,160 Speaker 1: are still being decimated by this war. This is a 53 00:02:55,160 --> 00:02:58,560 Speaker 1: deeply important story and a developing one, and will cover 54 00:02:58,600 --> 00:03:02,400 Speaker 1: it more in subsequent episode, but today we dive deep 55 00:03:02,520 --> 00:03:06,880 Speaker 1: into Israel's economy. To understand the cost of this war 56 00:03:06,960 --> 00:03:10,400 Speaker 1: to Israel's economy, we spoke to Kalite Olstein, who covers 57 00:03:10,480 --> 00:03:14,720 Speaker 1: Israel's economy and government for Bloomberg from Tel Aviv. She says, 58 00:03:14,880 --> 00:03:17,680 Speaker 1: to understand what's happening now, we need to go back 59 00:03:17,800 --> 00:03:21,680 Speaker 1: in history. How would you characterize the Israeli economy at 60 00:03:21,680 --> 00:03:23,200 Speaker 1: the time of the country's founding. 61 00:03:23,440 --> 00:03:26,000 Speaker 3: So I'm not sure we would have to go back 62 00:03:26,080 --> 00:03:28,640 Speaker 3: all the way to Israel's founding, which was in nineteen 63 00:03:28,680 --> 00:03:30,880 Speaker 3: forty eight. But I think a good point, or a 64 00:03:30,919 --> 00:03:34,320 Speaker 3: good time to go back to, would be the mid seventies, 65 00:03:34,520 --> 00:03:38,680 Speaker 3: after the nineteen seventy three jong Kipuro in which Israel 66 00:03:38,800 --> 00:03:42,000 Speaker 3: was taken by surprise attack from Egypt in the south 67 00:03:42,040 --> 00:03:46,240 Speaker 3: and Syria and the north. So after that, Israel's defense 68 00:03:46,280 --> 00:03:49,880 Speaker 3: spending sort as much as thirty percent of its GDP, 69 00:03:50,400 --> 00:03:55,760 Speaker 3: and inflation also soared, so Israel's economy was much on 70 00:03:55,800 --> 00:03:58,760 Speaker 3: the verge of collapse, I would say, in the mid eighties. 71 00:03:59,160 --> 00:04:02,720 Speaker 3: And then what happened in nineteen eighty five was that 72 00:04:02,880 --> 00:04:05,680 Speaker 3: a program was put into place. It was called the 73 00:04:05,880 --> 00:04:12,000 Speaker 3: nineteen eighty five Stabilization Plan, and it included various steps 74 00:04:12,040 --> 00:04:16,200 Speaker 3: like significant cuts in government expenditures, a significant cut in 75 00:04:16,240 --> 00:04:21,040 Speaker 3: the government deficit in wages, price controls were put into place, 76 00:04:21,920 --> 00:04:26,040 Speaker 3: fixed foreign currency rates were put in place, and so forth. 77 00:04:26,640 --> 00:04:29,080 Speaker 3: And I think one of the most important steps that 78 00:04:29,240 --> 00:04:31,880 Speaker 3: was put in place that year was the central banks, 79 00:04:31,920 --> 00:04:36,440 Speaker 3: the Bank of Israel's ability to print money, or rather 80 00:04:37,160 --> 00:04:40,440 Speaker 3: it was forbidden to print money from then on to 81 00:04:40,600 --> 00:04:44,920 Speaker 3: cover government deficit. Right so until then, Israel's central bank 82 00:04:44,920 --> 00:04:47,279 Speaker 3: could just give the government as much money as it 83 00:04:47,360 --> 00:04:51,520 Speaker 3: wanted to spend. And that was a very significant plan 84 00:04:51,640 --> 00:04:56,120 Speaker 3: that basically, to put it, simply saved the Israeli economy. 85 00:04:56,520 --> 00:05:01,240 Speaker 3: And by nineteen ninety so five years after the Stabilization Plan, 86 00:05:01,760 --> 00:05:05,159 Speaker 3: defense spending was way down to less than fifteen percent 87 00:05:05,240 --> 00:05:09,240 Speaker 3: of Israel's GDP, and by twenty twenty it had gone 88 00:05:09,279 --> 00:05:13,720 Speaker 3: down to Isliela's five percent of the GDP. Inflation was 89 00:05:13,800 --> 00:05:14,920 Speaker 3: completely tamed. 90 00:05:16,320 --> 00:05:18,920 Speaker 1: All of this opened up a new era of prosperity 91 00:05:19,000 --> 00:05:20,200 Speaker 1: for the Israeli economy. 92 00:05:20,680 --> 00:05:23,720 Speaker 4: It took us thirty years to become an instant success. 93 00:05:24,240 --> 00:05:28,000 Speaker 1: This is Ari Strasburg, VP of Strategy at Startup Nation Central, 94 00:05:28,120 --> 00:05:32,479 Speaker 1: a nonprofit organization that supports israel startup ecosystem. He joined 95 00:05:32,520 --> 00:05:33,880 Speaker 1: us over Zoom from Home. 96 00:05:34,200 --> 00:05:37,680 Speaker 4: It's been a very long road in developing and driving 97 00:05:38,200 --> 00:05:41,520 Speaker 4: the economic engine of this country. It really started in 98 00:05:41,560 --> 00:05:44,200 Speaker 4: the eighties when we had the turnaround of Israel's economy, 99 00:05:44,320 --> 00:05:47,240 Speaker 4: and then in the early nineties when we had the 100 00:05:47,279 --> 00:05:51,000 Speaker 4: immigration of over one million Jewish people from the Soviet 101 00:05:51,080 --> 00:05:54,719 Speaker 4: Union after the Soviet Union collapsed. You had a series 102 00:05:54,720 --> 00:05:58,800 Speaker 4: of events that basically generated the Israeli innovation ecosystem, the 103 00:05:58,839 --> 00:05:59,920 Speaker 4: technology companies. 104 00:06:00,240 --> 00:06:03,120 Speaker 1: Khalid also credits the emergence of a high tech sector 105 00:06:03,400 --> 00:06:05,880 Speaker 1: to Israel's military service requirements. 106 00:06:06,120 --> 00:06:09,920 Speaker 3: In Israel, everyone who's eighteen, both boys and girls, men 107 00:06:09,960 --> 00:06:12,680 Speaker 3: and women, they go to the army for two or 108 00:06:12,720 --> 00:06:16,080 Speaker 3: three years, and then what happens is they're involved in 109 00:06:16,520 --> 00:06:19,920 Speaker 3: various some roles. Some of them are obviously combat roles, right, 110 00:06:20,320 --> 00:06:22,440 Speaker 3: but then some of the other ones have to do 111 00:06:22,920 --> 00:06:28,120 Speaker 3: with intelligence, with cybersecurity, cyber defense, etc. And then I 112 00:06:28,120 --> 00:06:32,720 Speaker 3: would say that the Israeli Army in many ways nurtures 113 00:06:32,960 --> 00:06:36,279 Speaker 3: these people and these talents who later become the brains 114 00:06:36,320 --> 00:06:39,960 Speaker 3: behind the Israeli high tech and many you know, I 115 00:06:40,000 --> 00:06:42,560 Speaker 3: wouldn't say that all, but a lot of Israeli high 116 00:06:42,560 --> 00:06:46,599 Speaker 3: tech talent is nurtured in the Israeli Army, in the 117 00:06:46,600 --> 00:06:47,760 Speaker 3: military establishment. 118 00:06:47,960 --> 00:06:51,080 Speaker 1: And all of this, the turnaround of Israel's economy, the 119 00:06:51,160 --> 00:06:54,719 Speaker 1: immigration from the Soviet Union, the nurturing of tech talent 120 00:06:54,800 --> 00:06:58,240 Speaker 1: in the Israeli military has combined to create what Ari 121 00:06:58,360 --> 00:07:01,080 Speaker 1: describes as a vibrant tech community in Israel. 122 00:07:01,279 --> 00:07:05,240 Speaker 4: Today. You have about eight thousand startups in Israel, all 123 00:07:05,279 --> 00:07:09,240 Speaker 4: the way from the early seed companies to unicorns who 124 00:07:09,240 --> 00:07:11,800 Speaker 4: were one of the most dense areas in the world, 125 00:07:11,880 --> 00:07:14,960 Speaker 4: with a number of unicorns and a lot of parameters 126 00:07:14,960 --> 00:07:18,120 Speaker 4: that you look at from an innovation perspective, And he says. 127 00:07:17,920 --> 00:07:21,360 Speaker 1: This growing Israeli startup scene also started to attract attention 128 00:07:21,520 --> 00:07:23,320 Speaker 1: from companies outside the country. 129 00:07:23,480 --> 00:07:27,200 Speaker 4: So over the last decade or two was a lot 130 00:07:27,240 --> 00:07:31,679 Speaker 4: of multinational corporations coming to Israel and opening shop here 131 00:07:31,760 --> 00:07:37,680 Speaker 4: and putting R and D centers innovation centers in Israel. Apple, Google, Microsoft, 132 00:07:38,120 --> 00:07:41,120 Speaker 4: all of them have some of their most sensitive and 133 00:07:41,240 --> 00:07:45,480 Speaker 4: important R and D centers that are basically responsible for 134 00:07:45,520 --> 00:07:49,160 Speaker 4: their future growth as an organization, all here in Israel. 135 00:07:49,320 --> 00:07:53,720 Speaker 1: This combination of Israeli startups and multinational corporations has really 136 00:07:53,760 --> 00:07:55,040 Speaker 1: shaped Israel's economy. 137 00:07:55,240 --> 00:07:59,560 Speaker 4: Innovation or technology is really our business plan. We're not 138 00:07:59,720 --> 00:08:03,360 Speaker 4: that i versified as other mature economies are. 139 00:08:03,720 --> 00:08:06,840 Speaker 1: Tech now accounts for about eighteen percent of Israel's GDP 140 00:08:07,320 --> 00:08:10,080 Speaker 1: and more than half of its exports, and the sector 141 00:08:10,120 --> 00:08:12,840 Speaker 1: has helped boost Israel's GDP per capita to what it 142 00:08:12,880 --> 00:08:16,760 Speaker 1: is today, higher than that of France, the UK and Japan. 143 00:08:18,480 --> 00:08:20,880 Speaker 1: But recently things started to shift. 144 00:08:26,520 --> 00:08:29,360 Speaker 3: I would say since the beginning of twenty twenty three, 145 00:08:29,640 --> 00:08:33,280 Speaker 3: it was starting to go into a slightly i would say, 146 00:08:33,400 --> 00:08:38,360 Speaker 3: downward trend. Now this was because of several reasons. One 147 00:08:38,400 --> 00:08:41,560 Speaker 3: of them, which I think is a global reason, was 148 00:08:41,840 --> 00:08:45,080 Speaker 3: the high inflation, which you know, we signed many countries, 149 00:08:45,080 --> 00:08:48,240 Speaker 3: in many Western countries, and the high interest rates that 150 00:08:48,360 --> 00:08:51,360 Speaker 3: came with that. So that obviously put quite a bit 151 00:08:51,400 --> 00:08:55,520 Speaker 3: of burden both on households and on Israeli businesses that 152 00:08:55,640 --> 00:08:58,320 Speaker 3: had to pay more for funding, that had to pay 153 00:08:58,760 --> 00:09:03,040 Speaker 3: more when they returned to OANs, their mortgages, etc. And 154 00:09:03,440 --> 00:09:06,080 Speaker 3: at the same time, at the beginning of twenty twenty three, 155 00:09:06,520 --> 00:09:11,080 Speaker 3: Prime Minister Benjamin Nataniao's sixth government came into power, and 156 00:09:11,640 --> 00:09:14,800 Speaker 3: right away, right after they came into power in January 157 00:09:14,920 --> 00:09:19,320 Speaker 3: twenty twenty three, they introduced a judicial overhaul, which was, 158 00:09:19,559 --> 00:09:22,640 Speaker 3: to put it briefly, was aimed at weakening the power 159 00:09:23,080 --> 00:09:27,559 Speaker 3: of judges, which the government thought was too much. And 160 00:09:27,679 --> 00:09:32,360 Speaker 3: that brought on mass protests, and it actually brought to 161 00:09:32,440 --> 00:09:37,199 Speaker 3: the establishment of Israel's largest ever protest movement. So Israel 162 00:09:37,320 --> 00:09:42,079 Speaker 3: saw before October seventh, it saw mass protests every week, 163 00:09:42,280 --> 00:09:45,160 Speaker 3: every Saturday night, sometimes even more than once a week 164 00:09:45,200 --> 00:09:48,319 Speaker 3: on the streets, and that brought a lot of political 165 00:09:48,360 --> 00:09:52,560 Speaker 3: turmoil and social turmoil, and a lot of uncertainty, which 166 00:09:52,559 --> 00:09:56,280 Speaker 3: we know that the economy doesn't like. That, combined with 167 00:09:56,320 --> 00:10:00,360 Speaker 3: the high interest rates, had already made things much charter, 168 00:10:00,720 --> 00:10:06,000 Speaker 3: both for households and for businesses. After the break, with 169 00:10:06,120 --> 00:10:09,040 Speaker 3: trouble brewing before the war, and now the cost of 170 00:10:09,080 --> 00:10:22,160 Speaker 3: the war soaring, what comes next for Israel's economy. So 171 00:10:22,200 --> 00:10:24,679 Speaker 3: I think the starting point when you look at Israel's 172 00:10:24,720 --> 00:10:28,440 Speaker 3: fundamentals is an economy, it was pretty good. The depth 173 00:10:28,440 --> 00:10:32,240 Speaker 3: to GDP ratio and parameters like that, they were pretty good. 174 00:10:32,520 --> 00:10:35,800 Speaker 3: But then when you look on more specifically at how 175 00:10:35,840 --> 00:10:39,640 Speaker 3: individuals or businesses were doing, they were starting to struggle. 176 00:10:39,840 --> 00:10:42,800 Speaker 1: That's my colleague Galite Alstein talking about the status of 177 00:10:42,880 --> 00:10:47,720 Speaker 1: Israel's economy through the early fall. That's how things were. 178 00:10:48,200 --> 00:10:51,440 Speaker 1: But then there was the October seventh attack by Hamas 179 00:10:51,679 --> 00:10:55,920 Speaker 1: and the subsequent war in Gaza. In the immediate aftermath 180 00:10:55,960 --> 00:10:58,839 Speaker 1: of the attack, three hundred and sixty thousand reservists were 181 00:10:58,840 --> 00:11:02,240 Speaker 1: called by Israel to certain that's nearly four percent of 182 00:11:02,280 --> 00:11:07,520 Speaker 1: Israel's population and tomorrow Sacerdoti from Darrow says her company 183 00:11:07,640 --> 00:11:09,199 Speaker 1: felt their absence so. 184 00:11:09,280 --> 00:11:11,520 Speaker 2: Like people were afraid to leave the house during COVID, 185 00:11:11,520 --> 00:11:13,480 Speaker 2: people were afraid to leave the house. Here in Israel, 186 00:11:13,960 --> 00:11:16,400 Speaker 2: a lot of changes in the field. You can say, 187 00:11:16,520 --> 00:11:20,160 Speaker 2: I became interim CEO within a day or two and 188 00:11:20,240 --> 00:11:23,120 Speaker 2: we had fifty percent of our executive team was also 189 00:11:23,160 --> 00:11:24,760 Speaker 2: caught up to reserve. So we need to make sure 190 00:11:24,760 --> 00:11:27,640 Speaker 2: that our structure, our leadership structure, was in place. We 191 00:11:27,679 --> 00:11:29,520 Speaker 2: had to make sure that our employees had a safe, 192 00:11:29,600 --> 00:11:32,439 Speaker 2: comfortable place to work for an extended period of time. 193 00:11:32,720 --> 00:11:35,120 Speaker 2: There was a lot of ambiguity of you know, where 194 00:11:35,120 --> 00:11:36,640 Speaker 2: are we going, what's going to happen? How long is 195 00:11:36,679 --> 00:11:37,360 Speaker 2: this going to take. 196 00:11:37,559 --> 00:11:39,960 Speaker 1: The war has been going for over three months, and 197 00:11:40,040 --> 00:11:42,520 Speaker 1: pulling so many people out of the workforce is having 198 00:11:42,520 --> 00:11:46,880 Speaker 1: an impact on the economy. But recently the Israeli Defense 199 00:11:46,920 --> 00:11:49,400 Speaker 1: Force announced that a portion of the reservists are being 200 00:11:49,440 --> 00:11:52,920 Speaker 1: sent home to return to their families and to their jobs. 201 00:11:53,520 --> 00:11:53,960 Speaker 3: Fredrek Mi. 202 00:11:57,280 --> 00:12:01,600 Speaker 1: Da Tamar Ashavua Tomorrow told they've already seen the impact 203 00:12:01,600 --> 00:12:04,880 Speaker 1: of those decisions. At the company she works for, darro. 204 00:12:05,080 --> 00:12:08,319 Speaker 2: So, about half of them are back and in full capacity, 205 00:12:08,360 --> 00:12:12,400 Speaker 2: and then I'd say another twenty five percent are back 206 00:12:12,440 --> 00:12:15,560 Speaker 2: at like a fifty percent capacity, so a lot of comeback. 207 00:12:15,600 --> 00:12:18,920 Speaker 2: We we do expect at some point in the next 208 00:12:19,080 --> 00:12:21,760 Speaker 2: year for there to be additional absences. We understand that 209 00:12:21,800 --> 00:12:24,480 Speaker 2: this is not something that's going to be just three 210 00:12:24,520 --> 00:12:25,760 Speaker 2: months and that's it. 211 00:12:26,160 --> 00:12:29,600 Speaker 1: Unfortunately, part of the reason for sending reservists back to 212 00:12:29,679 --> 00:12:33,680 Speaker 1: work is war is expensive and the Israeli government is 213 00:12:33,679 --> 00:12:38,240 Speaker 1: figuring out how to fund it. Israel's GDP was forecast 214 00:12:38,280 --> 00:12:40,760 Speaker 1: to have fallen nineteen percent in the last quarter of 215 00:12:40,760 --> 00:12:43,760 Speaker 1: twenty twenty three, and the government just passed a budget 216 00:12:43,800 --> 00:12:46,600 Speaker 1: for twenty twenty four that assumes this war will last 217 00:12:46,720 --> 00:12:49,360 Speaker 1: for at least the rest of this year. We ask 218 00:12:49,400 --> 00:12:51,760 Speaker 1: Elite how much the government needs to come up with. 219 00:12:52,120 --> 00:12:54,360 Speaker 3: The cabinet had already voted on a budget for twenty 220 00:12:54,440 --> 00:12:57,200 Speaker 3: twenty four, but then it needs to be revised to 221 00:12:57,240 --> 00:13:02,560 Speaker 3: accommodate a nineteen billion dollar which is seventy billion shekels. 222 00:13:02,960 --> 00:13:06,280 Speaker 3: That's the surge and expenditure because of the war. And 223 00:13:06,400 --> 00:13:09,679 Speaker 3: also at the same time, the government is experiencing revenue 224 00:13:09,720 --> 00:13:12,360 Speaker 3: laws because of the war, and that is estimated to 225 00:13:12,440 --> 00:13:16,040 Speaker 3: be about ten billion dollars or thirty six billion shekels. 226 00:13:16,480 --> 00:13:21,680 Speaker 3: So the overall amount is when you combine these two 227 00:13:22,120 --> 00:13:25,280 Speaker 3: is roughly thirty billion dollars that the government now needs 228 00:13:25,360 --> 00:13:28,160 Speaker 3: to make up for in some sort of way. So 229 00:13:28,400 --> 00:13:31,680 Speaker 3: the deficit, the state deficit, the target of the state 230 00:13:31,720 --> 00:13:35,400 Speaker 3: deficit was raised to six point six percent of the GDP, 231 00:13:35,920 --> 00:13:39,920 Speaker 3: which is among Israel's widest this century. It really swelled, 232 00:13:40,480 --> 00:13:44,400 Speaker 3: and the government did make adjustments in this revised budget, 233 00:13:44,480 --> 00:13:48,960 Speaker 3: meaning it cut spending in some ways, and it also 234 00:13:49,080 --> 00:13:52,079 Speaker 3: put in place some revenue increasing measures which to put 235 00:13:52,120 --> 00:13:55,800 Speaker 3: simply a new taxes, and these all total at about 236 00:13:55,840 --> 00:14:00,199 Speaker 3: seventeen billion shekels to accommodate everything that I meant. 237 00:14:00,760 --> 00:14:03,400 Speaker 1: With no clear end insight to this war, a huge 238 00:14:03,400 --> 00:14:07,360 Speaker 1: amount of uncertainty also remains where the country's economy. I 239 00:14:07,400 --> 00:14:10,840 Speaker 1: ask Ali what economic indicators shall be watching for next? 240 00:14:11,400 --> 00:14:14,280 Speaker 3: We talked about the state deficit in the budget that 241 00:14:14,520 --> 00:14:17,679 Speaker 3: was stolen to six point six percent for twenty twenty four, 242 00:14:18,320 --> 00:14:21,680 Speaker 3: and growth is expected to go down to one point 243 00:14:21,760 --> 00:14:25,600 Speaker 3: six percent in pointy twenty four, and it's interesting to 244 00:14:25,680 --> 00:14:30,880 Speaker 3: see whether these numbers are sustainable. They're not very optimistic 245 00:14:30,960 --> 00:14:35,120 Speaker 3: numbers and all the same deficit during the year could 246 00:14:35,160 --> 00:14:38,560 Speaker 3: still swell, growth could still be lower than that one 247 00:14:38,600 --> 00:14:42,040 Speaker 3: point six the finance some ministry estimates, and these are 248 00:14:42,080 --> 00:14:44,600 Speaker 3: things to look out for because they will not only 249 00:14:44,960 --> 00:14:48,440 Speaker 3: have an impact on future fiscal policy, but also in 250 00:14:48,520 --> 00:14:54,120 Speaker 3: Israel's monetary policy that has to do with the fiscal policy, 251 00:14:54,360 --> 00:14:59,560 Speaker 3: and they're both affected by one another. All three big 252 00:14:59,680 --> 00:15:02,720 Speaker 3: credit trading agencies have put Israel on some kind of 253 00:15:02,800 --> 00:15:08,160 Speaker 3: negative rating review or negative review watch. I would say 254 00:15:08,160 --> 00:15:14,520 Speaker 3: that markets have factors Israel's current risk fact so maybe 255 00:15:14,560 --> 00:15:18,400 Speaker 3: it won't be such a big change there. And yet symbolically, 256 00:15:18,560 --> 00:15:22,440 Speaker 3: to have Israel's sovereign credit rating lord for the first time, 257 00:15:22,480 --> 00:15:25,680 Speaker 3: by the way, since it started being rated, would be 258 00:15:26,040 --> 00:15:29,960 Speaker 3: definitely a point in time that would mean something, and 259 00:15:30,080 --> 00:15:32,440 Speaker 3: especially see where it goes from there. So that's another 260 00:15:32,480 --> 00:15:35,200 Speaker 3: thing to look out for. And the last thing I 261 00:15:35,240 --> 00:15:38,520 Speaker 3: think I will mention Israeli high tech is almost too 262 00:15:38,520 --> 00:15:39,280 Speaker 3: big to fall. 263 00:15:42,320 --> 00:15:46,800 Speaker 1: As fighting continues and deaths mount, what happens next for 264 00:15:46,920 --> 00:15:51,080 Speaker 1: Israel's economy is just one part of the story. We'll 265 00:15:51,160 --> 00:15:53,320 Speaker 1: keep following the foul out of this war in the 266 00:15:53,360 --> 00:15:58,600 Speaker 1: coming weeks. Thanks for listening to the Big Take from 267 00:15:58,600 --> 00:16:03,680 Speaker 1: Bloomberg News, Sarah Holder. This episode was produced by David Fox. 268 00:16:03,880 --> 00:16:07,040 Speaker 1: It was edited by Caitlin Kenney and Jordan Fabian. It 269 00:16:07,120 --> 00:16:10,480 Speaker 1: was mixed by Alex Ubiura and Blake Maples. It was 270 00:16:10,520 --> 00:16:14,560 Speaker 1: fact checked by Adrianna Tapia. Our senior producers are Naomi 271 00:16:14,560 --> 00:16:18,200 Speaker 1: Shaven and Jildo Di Carli. We get editorial direction from 272 00:16:18,200 --> 00:16:22,360 Speaker 1: Elizabeth Ponso. Sage Bauman is our executive producer and head 273 00:16:22,400 --> 00:16:26,680 Speaker 1: of Podcasts. Special thanks to galat Alstein and Israel Bureau 274 00:16:26,760 --> 00:16:30,200 Speaker 1: Chief Ethan Brawner for the reporting that inspired this episode. 275 00:16:30,560 --> 00:16:34,040 Speaker 1: You can read Ethan's piece on Bloomberg dot com. Thanks 276 00:16:34,080 --> 00:16:34,640 Speaker 1: for tuning in.