The High Tech Sector in the Shadow of the Coronavirus Crisis
Main points from the box:
- The high tech sector’s output grew in 2020 by a solid pace of 5.8 percent, despite the economic crisis that broke out because of the COVID-19 virus. Fundraising by companies in the sector also increased markedly, allowing the continued expansion of business activity.
- High tech’s notable share in Israel’s economy is one of the factors in the moderate adverse economic impact of the COVID-19 crisis in Israel relative to that in many other advanced economies.
- Employment in the high tech sector decreased less than in other sectors in the economy, due to the rapid adjustment to remote work.
- Employment in high tech began to decline with the onset of the crisis. The lowest point was in August, when the number of employees in the sector was 7 percent less than in the corresponding month of the previous year. At the end of the year, there was a rapid recovery, and employment approached its environment of just before the crisis.
- There was heterogeneity in the adverse impact of the COVID-19 crisis, among various parts of the high tech sector. Some technology companies grew, due to the growth in demand for computers and technology services, while other companies endured an adverse impact on activity. In particular, seed-stage start-up companies faced funding difficulties this year, and their total capital raised declined by 35 percent.