Nearly 40% of Israeli Goods Exports Not Produced in Israel

Data from the "Calcalist" website reveals that approximately 40% of Israeli goods exports in the second quarter of the current year were not manufactured within Israel, despite being classified as Israeli exports. The total value of goods exports in the second quarter reached about $28.4 billion. Of this, $11.2 billion represented goods sold by Israeli companies to overseas clients without ever passing through Israel or being produced in its factories, instead being shipped directly between foreign countries.

According to "Calcalist," the share of these indirect exports was just over 9% until 2023, but has since quadrupled over approximately three years. The report attributes this shift to several factors, including the strength of the shekel, rising labor costs relative to productivity, customs regulations and fees, and companies' desire to be closer to their foreign markets. Supply chain disruptions and concerns over trade restrictions and boycotts of Israeli products also play a role.

The report suggests this trend also reflects a transformation in the nature of the Israeli economy, with the growing importance of services and the knowledge-based economy. Services now constitute about 53% of Israel's total exports, having surpassed goods exports for the first time in 2021.