The worldwide financial crisis is impacting the diamond trade. The impact of the crisis is seen in Israel more than any other country. Israel where more than third of the world rough diamonds are processed has seen the impact first hand. Another country that is impacted more than Israel by the global financial crisis in regard to diamond trade is India. Israel’s biggest problem is lack of cutters and polishers. The employment in cutting and polishing in the 1980s were about 20,000 and dropped to a more recent number of 2,000. In 2011, Israel imported $4.4 billion rough diamonds and exported $7.2 billion worth of polished diamonds. But only $1.5 billion worth of diamonds cut and polished in Israel and the rest were processed outside Israel. Diamond accounts for more than one fifth of the country’s exports. Many ultra-Orthodox Jews who are more religious and not willing to work in any other industry are attracted to cutting and polishing of diamonds.
Besides the global financial crisis, raw material cost has risen faster than the price of the final product eating into the profits. China is known for cheap labor for quite some time but recent trends indicates that cost of labor is rising in China.