Here’s How the War in Ukraine Will Impact the Israeli Economy
The war between Russia and Ukraine stands to have a major effect on the global economy, and there is much discussion of strict sanctions being placed on the aggressing superpower. Meanwhile, the Israeli economy also stands to be affected by the conflict in a variety of ways.
Israel and Ukraine have fostered an import-heavy relationship over the years. In 2020, Israel imported more than $150 million dollars of goods from Ukraine, with a heavy emphasis on food. More than $70m went toward the import of oils, dairy, eggs, and grains.
During a visit to Israel earlier this month, Ukrainian Deputy Foreign Minister Emine Dzhaparova said that Ukraine was the source of half of the grains imported into Israel.
“Cut your bread supply in half to understand how Israel will be affected,” she said. “In case of an escalation, the State of Israel will be directly affected.”
Furthermore, Ukraine is responsible for a large portion of construction material imports into Israel. In 2018, Israel imported more than $175m worth of iron and steel. As a result, the Israeli construction industry stands to suffer a blow from the ongoing conflict.
A significant chunk of the Start-Up Nation’s labor force is based in Ukraine, as cheaper wages, a lack of time zone-related complications, and exceptional hi-tech talent have led companies to outsource their work to the Eastern European nation.
Over the past few weeks, hi-tech companies have scrambled to prepare for war in Ukraine, either by finding redundancies to support themselves in case of a loss of labor power, or by relocating their Ukraine-based teams elsewhere.
Gas prices throughout Europe are expected to skyrocket due to Russia’s position as a key source of oil. The price per barrel of oil is currently over $100 for the first time since September 2014.
Gasoline prices in Israel were recently raised by NIS 0.34 per liter as of February 1 in response to supply chain complications. This latest development will only add more (increasingly expensive) fuel to the fire.
“Oil prices went through the roof. We’re talking about oil prices going to $103 a barrel,” said Dr. Alexander Coman from the Faculty of Management at Tel Aviv University. “This is dramatic, and we will have to pay for it at the gas station, and in the cost of electricity. In Israel, we pay particularly more because 60% of what we pay for gasoline is taxes, so everything is amplified dramatically.” (JPost/ VFI News)
“God, we ask that You watch over the countries affected by this war, and ensure that all of your people have food, shelter, and safety.”