Israeli economy has proven to thrive despite crisis: Expert

Over the weekend, Iran launched a direct attack on Israel. Although Israel successfully intercepted the drones and missiles, the potential for an Israeli retaliation remains uncertain. David Blumberg of Blumberg Capital joins Yahoo Finance to discuss the state of the Israeli economy in light of these developments.

Blumberg claims that Israelis are "somewhat used to these types of things." Blumberg notes that over the past 25 years, the country has weathered numerous crises, but has achieved consistent growth. He points to Israel's GDP per capita of $54,000, which exceeds that of some of the world's largest economies, as evidence of the economy's ability to "thrive despite and through downturns."

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This post was written by Angel Smith

Video transcript

JOSH LIPTON: Over the weekend, Iran launched its first ever direct attack on Israel with a salvo of hundreds of drones and missiles. David Blumberg is currently in Israel where his venture capital firm Blumberg Capital has offices and investments. David joins us now for more on the state of the Israeli economy and tech community. David, it is great to see you and have you on the show.

DAVID BLUMBERG: Thank you so much, Josh. Great to see you as always.

JOSH LIPTON: So David, you're in Israel now. You were obviously there over the weekend during this Iranian attack. So David, I just first want to know how you're doing.

DAVID BLUMBERG: You can see I'm fine. I'm happy. I feel safe.

With my team here on the ground, we had a meeting with about 20 of our portfolio companies last night. We did it by Zoom instead in meeting. But people are very resilient here.

The streets, you can't see them. They're full of people at restaurants. The clubs are-- the clubs are busy, traffic jams happening.

It's remarkable how normal it is in a time when, I think, in America or other places, if this happened, people would be really freaking out. Israelis are unfortunately somewhat used to these kinds of things. This is the most severe it's ever been. But they really did a great job with the Americans, the British, and the Jordanians, and French to knock down 99.9% of all the projectiles. So I think people feel like they won this battle.

JOSH LIPTON: And so David, the Israeli people a resilient community. At the same time, you know, David, they are engaged in this three-front war. It's Iran. It's Hamas to the south. It's Hezbollah to the north.

It's an enormous economic burden for the country, David. You just think of soldiers being called up and the tens of thousands of Israelis displaced in the north because of Hezbollah. How does the economy sustain this, David?

DAVID BLUMBERG: Well, I like to always look for history, Josh. So as we recall, over the last 25 years, there have been four or five war conflict situations plus COVID plus the dotcom crash plus a number of other financial crises, et cetera. So if we look at that, we see that over those 25 years, the Israeli GDP per capita measure of productivity of every individual working grew 2% to 3% faster than OECD countries during that same period pretty consistently.

Now, there were downturns and then they've come back. But over time, you see this growth. And in fact, I was looking at the data recently, in 2023, Israel achieved GDP per capita of $54,000. Now, that is higher than France, higher than the UK, and higher than Japan, which surprised me to see that growth. Because Israel, when I first started coming here, was a much poorer country.

But the tech boom in particular has really bolstered the economy. And as you're asking, it seems to thrive despite and through downturns. There are downturns here, but the next year they get stronger.