While there has been a significant increase in the tourist influx to Israel in recent years, it has been revealed that many European and American insurance companies refuse to sell insurance policies to people traveling to this country. Israel peaked in tourism with 4.5 million visitors in 2019; However, a significant change in the attitude of international insurance companies was observed after the pandemic.
Despite the intense tourist interest in Israel, many international insurance companies, especially European and American, have stopped selling insurance policies for this route due to political and security concerns. This situation puts both the travel industry and potential tourists in a difficult situation.
JERUSALEM (AA) – MUHAMMED HABISA – The “genocidal war” that Israel has been waging in the Gaza Strip for a year is also negatively affecting its own economy.
Israeli Prime Minister Benjamin Netanyahu argues that the 1-year-old genocide in the Gaza Strip and the recent increasing attacks on Lebanon mean a “war of existence” for Israel. However, indicators show that this has serious negative repercussions on the Israeli economy.
According to the news of Haaretz newspaper,The number of tourists visiting Israel has fallen at an unprecedented rate since its founding in 1948, due to attacks in the Gaza Strip and tensions in the north.
According to the data of the Israeli Bureau of Statistics for the first half of 2024, the number of tourists coming to the country decreased from 2 million to 500 thousand people, with a decrease of 75 percent compared to the same period in 2023.
According to the reports of the Palestine Israel Studies Center (Ehli) 10 percent of hotels in Israel are preparing to permanently close their doors by 2025.
According to the center, the crisis has reached such a level that international insurance companies, especially European and American ones, have many times refused to sell policies to travelers to Israel.
The last year when the number of tourists coming to Israel peaked was 2019, when the total number of tourists reached 4.5 million. In the following two years, tourism, like other countries in the world, suffered a serious blow due to the pandemic.
– Inflation increased
While Israel is preparing for an interest rate cut in recent months, with inflation falling below 3 percent, consumer prices have risen again. Accordingly, the country’s annual inflation has reached its highest levels since October 2023.
The Israeli market could not meet the demand for vital commodities, especially vegetables, fruits and some consumer goods, due to the increase in housing prices as well as the Red Sea crisis.
The Houthis, supported by Iran in Yemen, have been seizing commercial ships off the coast of Yemen, which they say are affiliated with Israeli companies, since October 31, 2023, in response to Israel’s attacks in Gaza, and have been attacking some of them with unmanned aerial vehicles and missiles.
Due to the crisis in the Red Sea, fresh vegetable prices increased by 13.2 percent and transportation prices increased by 2.8 percent in August.
-There is a real estate crisis
Housing prices increased by 0.9 percent monthly in the inflation index in August. While this was the eighth increase in a row, the increase on an annual basis was 5.8 percent.
Rents and housing prices have increased in many regions, especially in central Israel, for various reasons, such as those migrating from the Lebanese border and areas adjacent to the Gaza Strip since October 2023.
In addition, the absence of more than 90 thousand Palestinian workers in the construction sector since October 7 has increased the risk of a real estate crisis.
Data from the Israeli Contractors Association shows that the labor shortage in the real estate market, which was 40 thousand before the attacks, has recently increased to 130 thousand due to the absence of Palestinian workers.
-Israel’s credit rating was downgraded
International credit rating agency Moody’s downgraded Israel’s credit rating from “A2” to “Baa1” in September, while keeping the country’s credit rating outlook negative.
In the statement of the credit rating agency, it was noted that the main reason for the downgrade was that the geopolitical risk had significantly intensified and reached very high levels, causing significant negative consequences for Israel’s credibility in both the near and long term.
Following Moody’s, a similar step came from Standard & Poor’s. S&P downgraded Israel’s long-term credit rating from “A+” to “A” and its outlook to negative.
Security and defense risks were cited as the reason for downgrading the credit rating to negative.
