Israel is losing production - ordinary citizens will feel the consequences

About 40% of Israeli companies' merchandise transactions involve products sold abroad but never physically pass through Israel. This hides a risk of shifting production jobs to other countries. In the second quarter of 2026, the volume of such transactions reached $11.2 billion. Until 2023, the share of such transactions was about 9% of goods exports. The growth in exports increasingly does not mean new production capacity within the country.

The Israeli economy is facing a notable shift: about 40% of Israeli companies' merchandise transactions involve products sold abroad but never physically pass through Israel. According to the Central Bureau of Statistics, in the second quarter of 2026, the volume of such transactions reached $11.2 billion. Until 2023, the share of such transactions was about 9% of goods exports. In 2025, their volume reached $16.1 billion for the entire year, and in the first quarter of 2026, $8.8 billion. The main risk for Israelis is jobs: companies keep management and developers in the country but place factories abroad. This process is particularly sensitive for traditional industry. Since 2023, export volume has grown by $10.5 billion, but only $1.7 billion came from goods produced in Israel. The reasons cited are high labor costs, tax burden, regulation, a strong shekel, and political risks after the war in October 2023. The trend has a dual effect: companies bring profits and taxes, but employment opportunities in manufacturing within Israel are decreasing.