Why Israel’s economy is doing well

Look for articles on the web about Israel’s economy, and you will find little to choose from. As Britain wallows in recession and the rest of Europe is gleeful at a few meagre micro points of growth, Israel is plodding along nicely.

For five consecutive years, Israel recorded excellent export led growth – about 5% annually – and this achieved despite wars in Gaza and in Lebanon. Israel has been one of the first countries to emerge from the global recession.  I am involved in preparing two courses for manages of new businesses.

There are several reasons for this continuous success. Israel has had some very able macro managers. Bibi Netanyahu was considered a successful Finance Minister, even by his local political opponents. And the current governor of the Bank of Israel, Stanley Fisher, has a brilliant track record in international banking.

On another level, Israel’s industrial growth has been in the right place at the right time.  Amdocs, Teva, Nice and others are world leaders in the various branches of high tech.  Several Jerusalem-based companies are driving the revolution in solar technology. And significant gas reserves have been discovered off the coast, which will lead to a major improvement in the country’s balance of payments.

On a third level, demographic factors are providing the economy with a potent consumption boom.  Elah Alkalay describes this as a “feel good factor”.  Comparing Israel’s position to OECD averages, she writes: –

The fact that Israel has more children, fewer single-parent families, more women with university degrees, and more woman apparently in joining the workforce (assuming that it is possible infer this from these data), it presumably contributes to Israel economic soundness and the domestic growth engine.

Problems? As with the previous 61 years, the geopolitical outlook remains uncertain. The shekel is too strong for the country’s exporters. A sickening “politically correct” economic boycott is finding a home in parts of Northern Europe.

For all that, what remains clear, Israel’s current economic position is stable and solid growth can be predicted for the medium term.

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One Comment on “Why Israel’s economy is doing well”

  1. […] Afternoon Tea In Jerusalem What you want to know about Israeli commercial life and society « Why Israel’s economy is doing well […]

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