As the global business community braces for the transition into 2024, leading executives from diverse sectors within the Israeli business landscape have offered comprehensive reflections on the trends that defined 2023. Their insights, peppered with cautious optimism, shed light on the challenges overcome and those still looming on the horizon as the new year approaches in the shadow of war.
Capital market: Navigating uncertainties
Dr. Tiran Rothman, the CEO of Frost & Sullivan Israel, conducted a thorough analysis of the market’s performance throughout 2023. He noted that the year witnessed significant fluctuations driven by escalating inflation, surging interest rates, and geopolitical tensions. Despite these formidable challenges, Rothman highlighted the resilience and adaptability displayed by the markets, ultimately concluding the year with positive outcomes.
“The contours of the global marketplace are being shaped by technological advancements, evolving consumer trends, and sustainable practices.” In his forward-looking assessment, Rothman identified pivotal roles for inflation trends, US economic growth, and geopolitical dynamics, all of which will play significant roles in shaping the market climate,” he said.
Start-ups: Navigating turbulence with optimism
Itay Gura, at the helm of the start-ups and emerging companies sector at Barnea Jaffa Lande, acknowledged the myriad challenges faced by the Israeli hi-tech sector in 2023. However, his outlook remains resolutely optimistic. “Despite the adverse conditions, I remain optimistic about the future. The Israeli economy, and the hi-tech sector, in particular, is robust and has the will to recover,” stated Gura.
Expressing hope for the coming year, Gura extended his aspirations, saying, “It is my hope that the consistent, eight-year decrease in the number of new start-ups being established will end, and Israeli entrepreneurs will have bigger appetites and firmer ground to take risks and establish new ventures in 2024.”
Gaming: A year of transformation and key challenges ahead
Describing the entire start-up industry as a singular entity fails to capture the distinctive challenges encountered by each individual company and the specialized markets it caters to. Illustrating this point, Elay De Beer, the CEO of Buff Technologies, provided a reflective analysis of the gaming industry’s dynamic evolution throughout 2023.
Detailing the pivotal role of loyalty initiatives, particularly Buff.game’s pioneering efforts, he emphasized how these personalized rewards fostered a deeper connection between players and the gaming platform.
In assessing the challenges that the gaming industry is poised to confront in 2024, De Beer articulated concerns about market fragmentation, rising development costs, talent shortages, and heightened competition from other entertainment forms. “Addressing these challenges will be crucial for the video game industry to continue to thrive and remain a relevant and engaging form of entertainment in a rapidly changing landscape,” he stated.
Future of work: Navigating postwar economic challenges
Eran Mordechai, the CEO of Danel Human Resources, provided a nuanced analysis of the tech sector’s trajectory in 2023. He highlighted the significant global slowdown at the beginning of the year, precipitated by a halt in investments and a dramatic erosion in the value of companies worldwide and in Israel. As the year progressed, ongoing protests and a complex political situation exacerbated the tech crisis, resulting in a decline in demand for employees across various sectors.
Mordechai underscored the crucial role played by the war in reshaping economic dynamics. “The war accelerated growth in the defense and various companies in the security sector, and the industry experienced high demand for employees and many recruitments.” However, he emphasized the current crossroads the economy faces, dependent on government responses and the implementation of organized and adequate solutions for companies and industries.
Looking ahead, Mordechai envisaged two potential scenarios. If the government provides significant economic support, the economy could transition from a deficit to a state of growth, marked by increased workforce recruitment across various sectors. Conversely, the absence of a generous government proposal might lead to widespread layoffs and a deep recession.
Mordechai also acknowledged the potential extended impact of the war into 2024, affecting the entire year due to the time it takes for the economic market to recover. Sectors like the hotel and tourism industry, still grappling with the aftermath of evacuations, are expected to be particularly vulnerable.
Retail: Balancing challenges and importance
Dani Bezalel, CMO of Keshet-Teamim, described 2023 as a challenging yet important year for the retail and food market industry in Israel.
“The war forced us to work in very difficult conditions, which proved once again that we as a company and all of the retail and especially supermarket industry are very important to the national ability to stay strong and to overcome hard times,” he said, highlighting the industry’s proven role during previous crises, such as the COVID-19 pandemic and past wars.
Contemplating the challenges that lie ahead in 2024, Bezalel pointed to the paramount importance of maintaining a quality and committed workforce. He commented, “For 2024, I believe the main challenge that the retail and food market industry in Israel will have to deal with will be quality and committed personnel.”
Additionally, Bezalel noted the war’s impact on produce supply and the delicate balance between maintaining local suppliers and the cost of living, highlighting the industry’s contribution to national resilience.
Real estate: Transition, challenges and resilience
Adv. Avraham Aberman and Adv. Simon Synett, influential figures in the real estate sector, characterized 2023 as a year of transition marked by cooling and resilience.
Aberman said that “2023 will be remembered as a year of transition in the Israeli real estate market, marked by both cooling and resilience.” Economic factors, particularly interest rate hikes, strained developers, creating a cautious market atmosphere.
The outbreak of the war with Hamas significantly impacted the real estate sector, resulting in a near-total freeze in market activities. Despite these challenges, Aberman and Synett identified early signs of recovery, evidenced by a recent uptick in mortgage lending following historic lows witnessed in October.
In discussing the construction sector, Aberman and Synett highlighted labor shortages resulting from a significant reduction in Palestinian and foreign workers. This shortage poses a threat to housing supply, a critical issue being addressed by the government, recognizing its essence for the market’s survival.
Simultaneously, demand remains robust, partly fueled by Jews abroad seeking safe havens in Israel amid rising global antisemitism. There is also a growing demand within Israel for apartments with safe rooms, likely to be met by numerous urban renewal projects.
Looking forward to 2024, Aberman and Synett acknowledged the significant headwinds faced by the Israeli real estate market. The sector, however, retains a strong foundation of resilience and adaptability. The continued prevalence of high interest rates and the trajectory of the war will play pivotal roles in determining whether the year ahead sees further turbulence. The inherent strength of the market and its potential for adaptation suggest that opportunities for astute investors will undoubtedly continue to emerge.
Foodtech: Maturation and future demand
Eyal Afergan, co-founder and CEO of Imagindairy, provided insights into the ongoing maturation process of the foodtech industry.
He outlined significant milestones achieved by Imagindairy in 2023, as the sector transitions from a visionary stage to realizing its true potential. These milestones include obtaining regulatory approval in the US, securing a strategic investment from Danone, opening new headquarters with state-of-the-art labs, and signing additional agreements.
Looking ahead to 2024, Afergan anticipates further demand for nonanimal dairy and food products. He emphasized that companies delivering premium quality, sustainable products at cost-effective prices will thrive in this evolving landscape. He expressed confidence in Imagindairy’s continued progress and impact, emphasizing its commitment not only as a business endeavor but also as a national mission.
Afergan highlighted the war’s impact on the foodtech industry, stating, “The war has highlighted the need for food security action plans, as echoed by COVID-19, war in Ukraine, and disruptions in supply chains.” Imagindairy’s ongoing work and international operations are viewed not only as business commitments but also as contributions to a national mission.
Afergan underscored the importance of determination, grit, and resilience in allowing the tech nation to flourish, principles that will continue to drive progress in the foodtech industry.
Summing up, looking ahead
In summary, the insights and reflections of these key executives offer a multifaceted view of Israel’s business landscape in 2023 and set the stage for the challenges and opportunities that await in 2024.
As the global business environment evolves, the resilience and adaptability exhibited by Israeli industries, coupled with strategic foresight, will likely play pivotal roles in shaping the nation’s economic trajectory in the coming year, especially in light of the ongoing war and the impact it is sure to have on the nation’s economy.