The morning of October 7, 2023, was a rupture that transformed Israel in ways no single statistic can fully capture. Eylon Levy, who later served as an Israeli government spokesman, describes that date as a clear turning point for the country. On that day, Hamas and other Palestinian militant groups launched a surprise and devastating assault from the Gaza Strip into southern Israel, crossing the border in large numbers and attacking communities, military bases, and a music festival. Around 1,200 people were killed, most of them civilians, and 251 others were seized and taken hostage into Gaza. The shock of that morning, with families torn apart and entire kibbutzim shattered, triggered the wider regional conflict that has continued ever since. But beyond the immediate human tragedy, there has been a deeper economic cost. The Bank of Israel has estimated that the cumulative output lost from the fourth quarter of 2023, immediately after the attacks, through the end of 2025 amounted to 8.6 percent of annual GDP, which is roughly $59.67 billion in foregone production, trade, tourism, and investment. Those numbers can feel abstract, but they represent missed opportunities, businesses that closed, workers who were called up to reserve duty, foreign investors who hesitated, and a society struggling to function under the shadow of war. The attacks were not just a military event; they were a trauma that reset the country’s priorities, its economy, and its global standing.
Despite that immense shock, Israel’s economy showed a degree of resilience in the short term that surprised many observers. After the immediate postwar contraction, growth recovered quickly, and inflation did not spiral out of control. It remained within the country’s target range of 1 percent to 3 percent, a sign that the central bank and financial institutions managed the crisis with steady hands. That resilience was not accidental. It was rooted in Israel’s deep technology sector, its adaptable workforce, and a kind of national stubbornness that has become part of the country’s character. Perhaps the most striking shift was in defense technology. After the outbreak of the Gaza conflict, Israel turned even more decisively toward military innovation. Defense exports rose to $19.2 billion in 2025, a 47 percent increase from 2023. Israeli defense startups working with the Defense Ministry’s R&D directorate attracted more than $1 billion in funding, mergers, acquisitions, and financing in 2025, compared with roughly $150 million the previous year. These are not just numbers on a spreadsheet; they represent engineers and scientists in crowded labs, young veterans turning battlefield experience into inventions, venture capitalists taking risks, and a country determined to turn necessity into advantage. Levy, who served as a government spokesman from the start of the Gaza war until March 2024, saw this transformation up close. He stresses that the economy has held together, but he also warns that strength is not guaranteed. In his view, the resilience of Israel’s economy, powered by technology and defense exports, should speak for itself. But it does not leave any room for complacency, especially when the country is also fighting a very different kind of battle, one fought with narratives, images, and lies.
That other battle, according to Levy, is a deliberate disinformation campaign waged by Hamas and its supporters, and he believes it has been staggeringly successful. The goal is not just to win sympathy for Gaza, but to weaken Israel by isolating it, cutting it off from allies, and making investors think twice about doing business there. Levy puts it bluntly: “Undoubtedly one of the goals of the disinformation war against Israel is to weaken it. It’s to isolate it, to cut it off from its allies. It’s to make investors think twice, ‘Is it really worth doing business with this country?’” This campaign has involved denial and distortion of the October 7 attacks, fabricated claims of Israeli atrocities, recycled or doctored footage, and a flood of misleading narratives spread across social media. Researchers have catalogued more than 5,000 false or misleading claims since the war began. NewsGuard, a company that tracks misinformation, identified 111 false narratives across 331 websites. On X, researchers found more than 2,000 posts from verified accounts generating roughly 500 million impressions, including fabricated reports, doctored documents, and old videos passed off as new evidence. The scale is enormous, and the effect is real. Disinformation does not just disappear into an echo chamber; it shapes public opinion, fuels protests, influences politicians, and seeps into boardrooms. For investors, it creates uncertainty, and uncertainty is the enemy of capital. Levy argues that this campaign is not a side effect of the conflict but a central strategic weapon. The purpose is to destroy Israel’s reputation so thoroughly that its military, economic, and diplomatic strength no longer matters.
The impact on foreign investment has been measurable. Foreign direct investment in Israel, particularly in new greenfield projects, declined sharply after the October 7 attacks. In 2024, Israel had only 19 greenfield FDI projects, the lowest number in two decades and a steep collapse from 84 projects in 2018. That kind of drop suggests that the combination of war, regional instability, and negative narratives took a toll on how global companies and investors viewed the country. But the story is not as simple as a straight decline. The Israeli Finance Ministry has noted that Israel remains among the OECD leaders in foreign direct investment relative to GDP, with FDI accounting for about 2.7 percent of GDP. By 2025, nonresidents’ stock of direct investment in Israel was equivalent to roughly 49 percent of GDP, with the largest share of foreign investment going into energy projects, particularly natural gas in the eastern Mediterranean. So while some investors may have pulled back or delayed decisions, others saw opportunity, especially in the energy sector and in defense technology. Still, Levy sees the drop in greenfield projects as one symptom of a broader effort to isolate Israel. He believes that disinformation, including false allegations of genocide and apartheid, has made some international companies and funds hesitant to be associated with the country, even when the underlying business prospects are strong. The numbers show that Israel is not being economically strangled, but they also show a worrying hesitation among new investors. In a region as volatile as the Middle East, perception matters as much as reality, and a successful narrative campaign can do damage that missiles alone cannot.
Levy’s own career illustrates how deeply the information war has become entangled with diplomacy and politics. He is of British descent, and in March 2024 he was removed from his position as spokesman following complaints from the UK government over his public criticism of its stance toward Israel and the war. His removal was a reminder that the struggle over truth is not just fought online; it also plays out in foreign ministries, press briefings, and diplomatic backchannels. Levy has been outspoken in his belief that the disinformation campaign led by radical Islamic groups such as Hamas has been alarmingly effective. He refers to the United Nations’ position that Israel committed genocide in Gaza as a “hoax,” and he argues that this hoax is not just a false accusation, it has real-world consequences. “The genocide hoax is fueling real political violence in the West,” he says. “And the failure to stand up to it is fueling political extremism in these countries as well. So that’s the point that I’m always keen to emphasize.” He also draws a stark moral contrast that he says is often lost in the global conversation. “Hamas wanted people to be killed because, for Israel, dead civilians are a tragedy. For Hamas it was a strategy. And immediately October 7th didn’t trigger protests around it. It triggered celebrations,” he said. For Levy, the inversion of victim and aggressor is one of the most painful aspects of the conflict. He watched as October 7, a day of massacres and kidnappings, was met in some parts of the world not with horror but with justification or even joy. That experience hardened his conviction that Israel must defend not only its borders but also its name.
Looking forward, Levy sees little prospect of Israel withdrawing its forces from Gaza until Hamas is fully disarmed. The failure to dismantle Hamas, he argues, would leave the country vulnerable to another attack of the same scale, and no Israeli government would accept that risk. At the same time, he points to ongoing peace talks with the Lebanese militant group Hezbollah as a positive sign, evidence that even in the middle of a multifront war, there are diplomatic channels that can offer a way forward. But the larger struggle, in Levy’s view, is about how the world sees Israel. He describes a movement that is trying to convince ordinary people that Israelis are monsters, that Israel is an evil, genocidal, fascist, apartheid, white supremacist, colonialist, baby-eating state. He says the goal of this movement is to make sure no one does business with Israel, no one trades with it, and no one visits it. “Why do they spread these lies? Because they want to destroy this country,” he adds. Yet despite the ferocity of that campaign, Levy retains a belief in the underlying strength of Israeli society and its economy. The technology, the defense exports, the resilience of daily life in a country under constant threat, all of that, in his view, is the real Israel. But he insists that truth alone is not enough. The country must actively tell its story, counter the lies, and make the case to the world. The economy may be strong, he says, and hopefully that speaks for itself, but it definitely does not leave room for complacency. For Levy, the fight is not only military or economic. It is also a fight for memory, for honesty, and for the simple human right to be seen accurately rather than through a lens of hatred and falsehood. And in that fight, he remains convinced, Israel’s survival depends on both its strength and its willingness to stand up for the truth.