Israel's economy is facing existential threats due to ineffective systems and lack of regulation. The country's sectoral budget priorities and pork barrel politics have contributed to a productivity gap between Israel and other G7 countries. Protectionist policies, ineffective regulation, and lacking public infrastructure are also hindering economic growth. Around 50% of the population in Israel does not pay income tax, and a brain drain is exacerbating the country's economic challenges. The government's response to the war's impact on the economy has been inadequate, and Moody's warns that the damage to the economy will be long-lasting.