Israel’s economy October 2012: Blowing against the winds of gloom

The IMF has just released another report on the world’s finances, which should be avoided by those who hate reading bad news. “The global economy risks skidding toward recession just three years after pulling out of the previous one.”

Politicians like Obama may look for some positives ahead of the referendum on his first four years. Merkel is visiting Greece this week for the first time, trying to find a smile for the cameras. Cameron is desperate for glimpse of a positive stat, as he speaks to his party faithful this week in Birmingham. Even China’s leaders have shortened their gulps of self-praise. The bottom line is there ain’t too much genuine and lasting solid economic news to go round.

One small exception to this pattern is the IMF’s review of Israel. For example, growth in 2013 (3.6%) may well be better than for this year (3.3%) in the Holy Land, where as the global trend is in the opposite direction. Israel’s debt-to-GDP ratio, so dangerously high in Greece and Spain. is predicted to fall to 67% by 2015. In America, that figure is nearer to 120%.

A report posted on NASDAQ’s website pointed out the obvious. The IMF does not consider potential political changes – potential wars in the Middle East, general elections or other minor disturbances. However, the comment is overwhelmingly positive. “Some investors may want to consider a closer look at the Israeli economy despite the headwinds that are currently facing the nation.”

I have written recently that Israel’s financial decision makers have some difficult weeks coming up – uncertainties over the next budget, rising commodity prices, and falling tax revenues in the short term. And as the IMF has made clear, export markets are very soft for the immediate future.

What appears to be favouring Israel at this time is a relatively stable economic and commercial structure, which will soon be supported by revenues from new energy sources. It will be the task of the mandarins in Jerusalem and at the Bank of Israel to protect these achievements, whatever changes are in the air.

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