Israel's financial technology industry had a bumper 2019, with investment in this market doubling year-on-year to a record $1.8 billion, a report said on Wednesday.
Funding rounds continued into 2020 to a value of $351 million by May but the global lockdowns sparked by coronavirus would dampen funding, according to a report published by Start-Up Nation Central - an organization promoting Israeli innovation.
"We expect this trend to slow due to the COVID-19 pandemic, although it typically takes time to see a change in private market fundraising," said the report, entitled 'An Outstanding Period for Israeli FinTech with Challenges Ahead.'
"Startup revenues are expected to decrease as corporations are forced to cut down on their innovation budgets."
For firms that survive this initial financial shockwave, however, coronavirus could bring fresh opportunities as businesses adapt to new ways of working.
"The pandemic will boost the usage and adoption of new technologies," the report argued.
Israel's unemployment rate surged from 3.4 percent in February to a peak of 27 percent in April, then eased slightly to 23.5 percent during May.
The OECD said in its June forecast that Israel is facing a "severe recession", with GDP set to fall by 6.2 percent this year, based on a scenario of the infection rate dropping during the summer.
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Entertainment workers demonstrate outside the Finance Ministry in Jerusalem as coronavirus pandemic batters industry
(Photo: Amit Shabi)
The report also says that a second wave of coronavirus cases later in the year could see GDP plummet by 8.2 percent.
The government has eased coronavirus controls in recent weeks, but this has been accompanied by an increase in infections, prompting fears that restrictions may need to be reimposed. Infections have topped 19,000 in Israel, with more than 300 deaths.