According to the Bank of Israel (BOI), inflation in the Holy Land will remain under 2% during 2022. On the back of rising energy costs, supply chain disruptions and geopolitical considerations, much of the rest of the OECD is looking at the 5% mark if not more.

What makes the respected economists in Jerusalem so certain that this challenge will pass by?

The BOI points to wage restraint, stable gas prices domestically and other factors. And yet each factor is not without its critics. For example, just by talking to friends, nobody is going to kid me that wages will keep to a 2% hike. After all, the growing hightech sector is chronically under-staffed.

Another issue that must be called out is the influence and the long arms of the hightech sector.

If we are to remain positive, in the words of “The Economist”:

Today’s tech giants (Apple, Amazon, Alphabet, Meta, Microsoft) are placing bets on the technologies of the future…..The frontiers on which big tech is most focused seem to be the metaverse, self-driving cars and health care. About a tenth of the five companies’ acquisitions in the past three years have been of firms that specialise in augmented or virtual reality. That spending spree has been led (predictably) by Meta, which made eight of the 13 purchases. 

Guy Scriven: USA Technology Editor

These are the very sectors where Israel has demonstrated areas of excellence. This should ensure that the FDI will remain steady for the foreseeable future, creating work and strengthening the eco systems. Will this demand also stoke up consumer expectations

Alternatively, as Wall Street finally begins to dip, it is the tech sector that is taking the biggest knock (for now). “The Nasdaq Index is down 9.7% from its peak but ………. over the past year half of the 100 Israeli companies traded on Wall Street (not only the new ones) have fallen more than 50% from their peak and only 20% have had single-digit falls.”

Will there be layoffs and thus a relaxation of the anticipated wage inflation? Or will money become tighter, thus causing the price of money to rise – a piece of tech jargon for saying inflation is on the way.

From my perspective, Israel is completely tied to the fortunes of the global economy. Thus despite the talk of officials, the deceleration of the economy because of omikron, the country cannot escape the owes of its major economic partners.

It is going to take more than wishful talking to keep the Israeli economy on track in 2022.