Israel’s split economy

So is Israel in a free fall recession?

I was walking around the centre of Beersheba yesterday. This is the capital of Israel’s Negev desert. Wind swept and cold, shoppers seemed to be elsewhere. Several premises were boarded up. Depressing.

The “Madoff effect” will hit the Jerusalem economy in particular, as so many NPOs are located there. Special ed, student research, medicare care for the poor and more – many of these groups will have their funding severely restricted overnight.

Go to the economic section of the newspapers and you will read about inflation levels dropping. The Bank of Israel has dropped interest rates, but cannot compete with the near zero levels in America, which is keeping Israeli exports relatively expensive at a time of lower demand.

Now look again, but look hard at what is going on, almost slipping by unnoticed. Yesterday, I was informed of a string of potential investment deals worth tens of millions of dollars in high tech. In today’s issue of the Yediot newspaper, the journal has highlighted thousands of positions in different sectors waiting to be filled. 

Personally, I took part this week in a new effort to launch a Cleantech forum in Jerusalem, specifically aimed at bring new technologies and biz dev facilitators together. The first meeting will be in about three weeks and we already have people queueing up to present. There are more companies than we believed.

The conclusion: It is not all doom and gloom. There is a very sorry side of this downturn, which will hit people badly. There is also a second economy, which is soldiering through and should emerge triumphant in 12 months time. That is the sector for the overseas analysts to act on, now.

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