Manufacturers warn strong shekel could lead to ‘deep recession,’ urge ’emergency measures’

Israeli manufacturers are calling on the government to act, as they warn that the sharp appreciation of the shekel is harming exports, is leading to losses for industry and the tech sector and could cause a recession.

“The appreciation of the shekel is seriously damaging industry and high-tech,” says Manufacturers’ Association of Israel (MAI) President Avraham (Novo) Novogrotzky. “Without emergency measures, this could lead to a wave of layoffs, significantly harm the industry in the periphery, and cause the economy to deteriorate into a deep recession.”

Novogrotzky and Alon Ben Zur, chairman of the Israeli High-Tech Association, have asked Knesset Finance Committee Chairman Hanoch Milwidsky to convene an urgent committee meeting, while calling on the government to formulate a national emergency plan.

The Israeli shekel has been trading around a four-year high against the dollar, and is close to a 30-year high, amid continued gains in the local stock market, a flow of investments into tech and defense companies, and a weakening dollar globally.

With exports making up as much as 40 percent of economic activity, exporters selling primarily to the US and Europe have been vocal about their diminishing competitiveness, especially as it has coincided with a 15% tariff on Israeli goods entering the US and a spike in the costs of payroll, fuel, electricity, and other living expenses.

“This situation is eroding the economic viability of multinational and foreign companies to have development centers in Israel,” says Novogrotzky. “Without a response, we expect a spike in brain drain and development centers moving abroad, which will seriously damage Israel’s brand as a Startup Nation, and incur huge losses in future tax revenues.”