| Economic news |
| UNEMPLOYMENT DROPS
TO 8.8% FOR THE FIRST TIME IN DECADE (2/28) For the first time in a decade, Israel’s unemployment rate fell to a seasonally adjusted 8.8% of the civilian labor force in the fourth quarter of 2005. The number of unemployed fell by 600 people during the quarter to 244,000, the Central Bureau of Statistics reported today. GLOBES reports that the unemployment rate was 8.9% in the third quarter, 9.9% in the fourth quarter of 2004, and 10.9% in the fourth quarter of 2003. The unemployment among men fell to 8.4% in the fourth quarter, or 124,200. The unemployment among women fell to 9.2% in the fourth quarter, or 119,800. In recent years, the highest unemployment rate among men was 10.6% in the first quarter of 2003, and the highest rate among women was 12.1% in the first quarter of 2004. The unemployment rate fell 7.1%, or 18,800 persons within a year. From the peak of 296,000 unemployed at the height of the intifada two years ago, the number of unemployed has fallen 17.5%, or 52,000 persons. Israel’s workforce expanded by 93,000 in 2005, of which 54,000 full-time jobs and 39,000 part-time. The civilian labor force grew to over 2.78 in the fourth quarter, of whom 2.54 million were employed - 1.35 million men, and 1.18 million women. The proportion of the labor force rose to 55.7% of the population in the fourth quarter from 55.2% in the third. The proportion of working men was 61% of the male population in the fourth quarter, up from 60.8% in the third quarter. The proportion of working women was 50.6%, up from 49.9%. WORLD OWES ISRAEL $23b (2/26) Most of the world’s debt to Israel is to the private sector - over $22.7 billion. The world owes Israel’s banks just over $3.1 billion. Israel’s public sector, headed by the government, continues to borrow on international markets, in order to recycle debts and cover budget deficits. Israel’s gross external debt fell by $250 million in 2005 to $75.5 billion. The surplus of short-term assets (debt instruments) totaled $40 billion at the end of December; an increase of $4.7 billion in 2005, due mainly to the considerable increase in deposits abroad by the banks. Net short-term debt is an important measure in assessing an economy’s risk, and the surplus of short-term assets is likely to contribute to an improvement in Israel’s credit rating. The Bank of Israel states, "The balance of Israel's external liabilities totaled some $153 billion at the end of December 2005, a rise of $16.5 billion in 2005." This is a positive development, caused by sizeable foreign direct and portfolio investment. The Bank of Israel cited with satisfaction, "The increased profitability of the business sector, the contraction of the budget deficit, the improved geopolitical situation and the accelerated pace of privatization enabled Israel's economy to attract an unprecedented amount of nonresident investment and to benefit from the global trend of international flows of capital into the emerging markets." STUDY: TERROR BARELY
AFFECTS STOCK MARKET (1/17) YNET reported the study, aimed at examining the extent of a regular effect of terror attacks and anti-terror policies on the capital market, also revealed that stock rates are barely influenced by the targeted killings carried out by the IDF in retaliation to terror attacks. The study was conducted by Prof. Shmuel Hauser, Prof. Rafi Melnick and Dr. Rafi Eldor from the Interdisciplinary Center in Herzliya. According to the findings, an accumulation of terror attacks causes investors to move from the stock market to more stable investment channels, such as short-term government bonds. The study was based on a sample of 460 terror attacks carried out in Israel and of 58 targeted killings between the years of 2000-2003. The researchers set up a quantitative measure in order to evaluate a pessimism level, which included various components of the terror attack's nature, including the attack's location, whether it was a suicide bombing, the number of casualties and the extent of media coverage the attack received. According to the measure of investors' pessimism following terror attacks, the researchers discovered that the stock rate drop increased with a rise in the pessimism measure. The drop was caused by the investors' estimation that ongoing terror attacks would lead to a decline in companies' expected profitability. FOREIGN INVESTMENT HITS
$9.7B. IN '05 (1/9/06) The latest figures published by the Bank of Israel on Sunday [Jan. 8] show that the most outstanding component in the increase was investment in shares traded on the Tel Aviv Stock Exchange, which reached $2.1 billion in 2005. "Foreign investors were the ones who moved the market up in Israel," said Benny Sharvit, head of research and global markets at Gaon Investments. Direct investment, however, still represented the main chunk of the increase, reaching $5.7 billion for the year. Total investment in traded Israeli securities including stocks and bonds totaled $4.1 billion. Total foreign investment in December reached $648 million. Direct investment totaled $255 million and investment in traded securities stood at $393 million during the same month. ECONOMY GROWS 5.2% IN 2005
(1/2/06) "It's good news," said Leader & Co. analyst Jonathan Katz. Everyone expected that the Israeli economy is growing rapidly, and it's apparently growing even more rapidly than people thought," he said, cautioning, nonetheless, that the quick growth rate could lead the Bank of Israel to tighten monetary policy and continue raising the interest rate. Policy-makers looking for inflationary pressures could interpret the quick GDP growth rate as a signal that the economy is probably growing beyond what it can maintain for the long-term, Katz said. The new figure was higher than Bank of Israel Governor Stanley Fischer's most recent forecast of 4.6% GDP growth for 2005, as well as the bureau's own prediction of 5.1% growth released in late September. This is the highest growth figure for the country since the economy grew 7.7% in 2000 and 5.4% in 1996, outpacing GDP growth among the OECD (Organization for Economic Cooperation and Development) member states, which averaged 2.7%. GDP grew 3.6% in the US, 3.4% in Spain, and 3% in Canada. Israeli GDP grew an updated 4.4% in 2004 and 1.7% in 2003, the CBS added. With the population growing 1.8% in 2005, the GDP per capita grew 3.3% to NIS 80,100, or US$17,800, the bureau said, noting that GDP per capita was on the rise abroad, as well. Among OECD member countries, GDP per capita grew 2% on average. "(Former finance minister Binyamin Netanyahu) did a good job-reforming the labor market, capital market, the ports, and others-and the government ended up spending less than it expected," commented Shlomo Maoz, chief economist at Excellence Nessuah. INCOMING
TOURISM THE SEMI-ANNUAL ISRAELI INBOUND TOURISM SURVEY released today shows that in the first six months of 2005, there was a 73 per cent increase in the number of first-time visitors to Israel-328,000 compared to 190,000 in the same period last year. The number of those arriving in the country for touring and sightseeing purposes more than doubled to 156,000 from 75,000 in the first half of 2004. Revenues from foreign tourism rose 23 per cent to $1.1 billion. "The data show the effectiveness of our marketing efforts. Tourism is a major source of revenue for all sectors of Israeli society," says Israeli Minister of Tourism Avraham Hirchson. 11,000 tourists were interviewed for the survey that is intended to provide a snapshot of foreign tourists to Israel. The survey outlines their expenses, length of stay, purpose of visit, where tourists stay and more. According to the survey, in the first six months of 2005, the number of tourists identifying themselves as Catholic rose 91 per cent to 156,000, 104,000 described themselves as Protestant (+39 per cent), 104,000 as other Christian (+53 per cent), 371,000 as Jewish (+5 per cent) and 130,000 said that they had no religious affiliation (+27 per cent). The number of tourists arriving in Israel for pilgrimage purposes doubled from 68,000 in the first six months of 2004 to 138,000 this year. A 36 per cent rise in the number of business travelers was also reported. Those arriving on organized tours numbered 181,600 in the first six months of 2005, up 40 per cent from 88,000 a year ago. ISRAEL’S WINE
INDUSTRY MAKING A FORTUNE (12/2) UNEMPLOYMENT
FALLS TO 8.9 PERCENT IN THIRD QUARTER (11/28) This is the first time unemployment has dropped below 9% of the country's workforce since the second quarter of 2001. The figure has been falling steadily from a 10.9% peak in November and December 2003, but had stayed at 9.1% from March to August. FOREIGN
INVESTMENT IN ISRAEL AT RECORD LEVELS (9/26) Foreign direct investment in Israel, from January trough August 2005, has reached $4.2 billion, 2.5 times the 1.66 billion invested in all of 2004. Foreign investment in the marketable securities portfolio has totaled $3.11 billion from January to August this year, 56% of the total investment in securities in all of 2004. Foreign investment in securities traded in Israel totaled $2.61 billion in January-August, five times the $526 million invested in all of 2004. Foreign investment in the Tel Aviv Stock Exchange (TASE) listed stocks has totaled $2.02 billion from January to August, 4.2 times the $483 million invested in all of 2004. Foreign investment in bonds totaled $591 million from January through August of this year, compared with a total of $43 million invested in 2004 and $79 million in 2003. INTEL TO
BUILD $4B PLANT IN KIRYAT GAT (7/25) TEVA
CLOSES LARGEST DEAL IN ISRAEL’S HISTORY (7/25) MACCABIAH GAMES BOOST
ECONOMY (7/12) DIRECT
FOREIGN INVESTMENT IN ISRAEL CLIMBS TO $6B (6/28) Areas of interest for investors are advanced technology in communications, information, life sciences and security. Rachel Roi, who heads the ministry's department for encouraging investment, is working on a plan to set up and expand development centers that draw multinational corporations to Israel instead of China, India or Eastern Europe. According to Minister of Trade and Industry Ehud Olmert, "helping foreign investors is what we are all about. The Israeli market enjoys a good reputation because of its leading human capital and the increasing number of international companies satisfied with their operations there." ISRAEL’S
ECONOMY IN GOOD SHAPE (4/26) JERUSALEM INDUSTRY ON
THE RISE (3/15) Tuttnauer said his forecast is contingent on continued calm in the city. "If buses start blowing up again," he elaborated bluntly, "of course these figures will go down." Following three hard years, Jerusalem-area industrial sales rose by 10 percent in 2004 to NIS 12.8 billion, and the area's industrial exports grew 17.5 percent to NIS 6.8 billion, Tuttnauer said. Last year, some 150 new workers were absorbed into Jerusalem's industrial workforce, bringing the total to roughly 20,350 at the end of the year. However, some 67,100 people have left Jerusalem over the past nine years, Tuttnauer estimated, noting that the majority of those leaving are young and full of potential. "We're losing the cream of the crop," he lamented. FITCH
SETS ISRAEL’S "The improved local currency rating Outlook reflects a decline in Israel's public debt ratio in 2004 and better medium-term debt dynamics," commented Richard Fox, Senior Director in Fitch's Sovereign team. "Demonstrable spending control and a political commitment to spending restraint and deficit limitation lead Fitch to conclude that the debt ratio has at least stabilized and will probably trend down in the medium-term, albeit gradually. This marks a significant, if not decisive, turning point in Israel's public debt dynamics." VC INVESTMENT
JUMPS 45 PERCENT IN 2004 (1/25) The recovery in Israel is better than in the United States, where venture capital investment was $20 billion in 2004, up 8 percent from $18.9 billion a year earlier but way down on the $110 billion invested in 2000. The communications sector attracted the highest sums, with 117 companies raising $430 million, 29 percent of the total and up from $332 million in 2003. The software and life sciences sectors came next, each gaining 22 percent of the total investment. MERRILL
LYNCH JOINS OTHERS IN PRAISING ISRAEL (1/25) ISRAEL’S EXPORTS UP (1/19) STANDARD AND
POORS UPGRADES ISRAEL’S CREDIT OUTLOOK (1/12/05) 383,000 ISRAELI BUSINESSES IN
2003 (11/8) About half of these, or 193,000, were independent businesses and companies with no employees. The remaining 189,000 businesses had at least one worker, and most of these -140,000 - had no more than four employees. Just 2,549 businesses, or less than one percent of the total, had more than 100 paid workers. The businesses that had employees employed 2.3 million workers. The companies with more than 100 workers employed 56 percent of them, or 1.3 million workers, while companies with four or fewer workers employed just 10 percent of the nation's employees. ISRAELI EXPORTS ON THE
RISE (10/26) ISRAELIS
PAY THE HIGHEST TAXES OF ANY DEVELOPED COUNTRY (9/14) The Israeli per capita GDP equals just over half (55%) that of the U.S., and 69% of the OECD (organization of economically advanced industrial states) average. ISRAEL AND
VIETNAM SIGN ECONOMIC DEAL (8/27) TEL AVIV AMONG
MOST EXPENSIVE CITIES (8/23) GDP
GROWS 4.1 PERCENT IN FIRST HALF OF 2004 (8/17) Fixed investment rose in the first half of 2004 by 2.9 percent, after dropping in the second half of 2003 by 8.4 percent. Private consumption went up in the first half of 2004 by 3.9 percent, following a 7.7 percent increase in the second half of 2003. Spending on durable goods also increased 6.7 percent while there was a 2.3 percent rise in purchases of clothing, food, gas, electricity, education services, health and entertainment. The business sector grew by 5.9 percent, including start-up companies, which accounted for 0.1 percent of this growth. Investments in various industrial sectors increased by 4.5 percent, after a steep decline of 9.4 percent in the second half of 2003. ISRAEL NUMBER
ONE IN R&D SPENDING (7/16) The IMD Yearbook also announced that Israel has been upgraded from 54th to 51st place in economic performance. Israel is in 41st place in real GDP growth, ahead of Austria, Norway, Italy, France and Germany. In GDP per capita dollars, Israel is in 31st place, behind Luxembourg, in first place, and ahead of India, in last. The IMD Yearbook rates 60 countries according to 323 economic parameters, based on economic data from business entities around the world, including the Federation of Israeli Chamber of Commerce. The U.S. heads the competitive rating, followed by Singapore, Canada, Australia and Iceland. The last four countries on the list are Venezuela (in last place), Argentine, Indonesia and Poland. ISRAIR CHALLENGES EL AL (6/18) ECONOMY
JUMPS BY A SURPRISING 5.5 PERCENT (5/18) VENTURE
CAPITAL FUNDING First investments made up for 44 percent of the total. The average first investment by Israeli VCs was $2m., and the average follow-on investment was $800,000. Israeli VCs also invested $22m. in ten foreign companies. This compares to $18m. in the year-earlier quarter and $33m. in the previous quarter. ISRAEL
HIGH-TECH COMPANIES RAISED $1B IN 2003 (1/6) Pitango and Genesis were the funds that made the largest number of total deals (first and follow-on) with 18 each. Israel Infinity, Israel Seed and Evergreen made 15, 14 and 13, respectively, while Giza and the Challenge Fund each made 12 deals. In 2003, first or new portfolio investments represented 47 percent of the total amount invested by Israeli venture capital funds. This is a 10 percent increase from 2002 when first investments comprised just 42 percent of the total. IVC estimates that Israeli high-tech companies raised $1 billion in 2003 from Israeli VCs and other investors. Capital raising for 2004 is projected by IVC to again approximate the $1 billion level. GDP
GROWTH IN 2003 Growth in the old economy (excluding start-ups) was higher finishing at 2 percent. In addition, the CBS report cited a rise in private consumption, up 2 percent, after remaining unchanged in 2002. The standard of living (per capita consumption) was unchanged, after dipping 2 percent in 2002. The CBS chief national statistician Soli Peleg said that most indicators were higher, during the second half of the year. She added that the statistics showed a definite increase in activity, but stressed that the investment figures were a particular cause for concern. She also said that work sanctions and disruptions resulting from disputes between the Histadrut and the Government were affecting business, and changes in the figures could only be calculated after these measures were discontinued. Despite talk of increased imports of consumer products, per capita imports of electrical and other durable items fell 1.8 percent in 2003, after declining 10.4 percent in 2002 and 9.7 percent in 2001. Imports of other items rose by only 0.3 percent, after falling 1 percent in 2002. Exports of goods and services grew 5.5 percent in 2003, a positive turnaround from falls of 5.4 percent in 2002. Exports were nevertheless affected by three months of sanctions and disruptions, which have included the ports and customs workers. Imports of goods and services unexpectedly dipped 2.1 percent, after dropping 2.3 percent in 2002. Defense consumption unexpectedly declined 4.6 percent in 2003, following the defense budget cuts and an 11.6 percent drop in defense imports. ISRAEL
IN 2003: Economic growth, however, was on the rise in 2003 after two years of contraction. Israel's gross domestic product expanded by 1.2 percent in 2003, the bureau estimates, after contracting by 0.8 percent in 2002 and 0.9 percent in 2001. GDP per capita came to $16,300 in 2003, the CBS estimates, or NIS 74,100, which means that GDP per capita continued to contract this year, by 0.6 percent, after dropping by 2.8 percent in 2002. Public expenditure contracted by 1 percent in 2003, after expanding by 5.7 percent in 2002. The CBS said most of the decrease was due to a 4.6 percent drop in defense consumption. In 2002, public expenditure had soared by 11.5 percent. CNN-TIME
NAME ISRAELI BUSINESS GIANT Agassi, 36, lives in California's Silicon Valley with his wife and two children, but returns frequently to his native Ra'anana, Israel. At the young age of seven, Agassi programmed his first computer and in his twenties started four companies and sold one, Top Tier, to SAP for $400 million. In February, SAP made Agassi the first non-German member of its board, and he replaced SAP founder Hasso Plattner in the top technologist role. SAP is the third-biggest software house in the world, after Microsoft and Oracle. It commands 35 percent of the business-software market, which is estimated to be worth $40 billion a year. SAP has made Israel its global development center for its SAP Business. SAP recently leased an 8,000 square meter location in Ra'anana where it will set up SAP House and unite all of the company's development centers in Israel under one roof. SAP employs some 450 workers in Israel. The company's operations with large organizations in Israel are conducted through Ness Technologies, the exclusive distributor for SAP's Enterprise Resource Planning management application in the country. Agassi's personal wealth is estimated at approximately $40 million. THE
ECONOMIST PREDICTS The Economist predicted that growth in Israel would be much higher in 2004, led by exports. The magazine stressed that recovery in economic activity and tax revenues had begun as early as mid-2003. The Economist praised the Bank of Israel’s interest rate policy, saying that foreign currency exchange rates had remained stable, despite the interest rate cuts. The magazine believes that inflation and prices will continue to fall in the coming months, as a result of lower private consumption and domestic demand. These two factors are expected to rise next year, albeit modestly. The Economist now forecasts negative inflation for 2003, and very low inflation of 0.8% in 2004. The magazine also believes that Minister of Finance Benjamin Netanyahu’s policy will have an effect on the budget deficit. The Economist forecasts that the budget deficit will amount to 4% of GDP in 2004, and 3% in 2005, in line with the official government targets. U.S.
TREASURY’S SNOW PROMOTES U.S. President George W. Bush had promised to send the U.S. secretaries of the Treasury and Commerce to the region to spur investment in the Palestinian economy, but reports indicated that Snow had difficulty finding American business people to join the trip because of the present security climate and the escalation in hostilities. Snow is on a 10-day visit that will also take him to Jordan, Saudi Arabia, Afghanistan and Pakistan before he heads to Dubai for meetings of the International Monetary Fund and World Bank. U.S. officials said Snow would emphasize possibilities for economic development in the troubled economies of Israel and the Palestinian Authority as part of Washington's peace efforts. TREASURY
DEPARTMENT: ISRAEL'S ECONOMY LOOKS PROMISING (8/28) Private consumption, the largest component of the GDP (60 percent), is expected to grow by .3 percent this year and 1.2% in the next. The treasury's forecast has a direct impact on fiscal policy. Budget deficit is measured as a percentage of GDP, so a high GDP projection gives the government more fiscal leeway. Besides positive signs in Israel, the treasury's forecast was based on two external assumptions: that there will be no serious change in the security situation and that the world economy will grow by 2.7%. EL
AL SHARES RISE SHARPLY ON FIRST DAY OF TRADING (6/12) According to HA'ARETZ, the Flying Cargo Company, owned by Avraham and Danny Reich, is one of the two previously unknown parties that bought a substantial stake in El Al during its initial public offering on Tuesday. The other is apparently a person or company active in tourism. Flying Cargo reportedly bought shares and options for about 15 percent of El Al, both during the issue and in off-market transactions, while the tourism investor bought shares and options for 10 percent of the company. The Borovitz family's Knafaim-Arkia company and Koor Industries, the only group that has so far publicly acknowledged its purchase, bought 46,000 units of the issue for NIS 15 million - 38,000 during the offering and 8,000 in off-market deals. The fact that three individuals or groups now own substantial packages of El Al shares and options means that one or more of them might be able to form a controlling interest if they exercise their options. A fourth player might be the company's workers, who bought 2 percent of the airline at a 30 percent discount on Tuesday and have the right to buy another 8 percent, at a 70 percent discount, at the end of 2004. They are currently setting up a corporation to manage their shares. VIOLENCE
HAS CAUSED The violence in Israel over the past two years necessitated expanded operations by the Israel Defense Forces and other security forces in the West Bank and Gaza Strip. It caused a substantial increase in direct and indirect defense spending to an estimated NIS 3 billion (approximately $750 Million) this year. These costs come on top of the NIS 7 billion (approximately $2.7 billion) in defense spending in 2000-01. The IDF spent about NIS 1.5 billion (approximately $0.34 billion) on Operation Defensive Shield in April 2002, in the aftermath of the Passover bombing of the Park Hotel in Netanya. Another NIS 500 million (approximately $116 million) was spent on protective measures and defense of communities along the seam line. Civilian costs from terrorist attacks and incidents are estimated at NIS 4 billion (approximately $0.9 million), including large reinforcements for the Israel Police, and payments to victims of the terrorist attacks and hospitalization costs. Officials in Jerusalem estimate that were it not for the violence, the steep cuts in National Insurance Institute payments could have been avoided, and the cut on civilian public consumption (education and health services and local authorities) could have been smaller. DUN
AND BRADSTREET: 17% OF ISRAELI BUSINESSES IN DANGER (5/29) The food shop sector is the worst hit of those surveyed, with 40.7% of businesses in danger. Building contractors are next, with 26.3% of businesses in danger, followed by food producers, with 23.3%, and wood & paper industries at 22%. ISRAEL’S
GDP GREW AT 2.5% ANNUAL RATE IN IST QUARTER 2003 (5/14) Imports, excluding the security sector, dropped a dramatic 19.3%, and consumer spending a whopping 30.5%, affected primarily by a 74.1% annual drop in car sales. Interestingly, spending on household appliances increased. Consumer spending in other areas, such as clothing, medicines, and holidays, remained as it was the previous year. Spending on fixed assets, such as homes, dropped 8.3%, following a similar drop during the last quarter of 2002. Much of the increase in exports came from the diamond industry, which rose 19.1%, in contrast to a 61.1% drop in tourism. MOODY'S
REAFFIRMS ISRAEL'S CURRENCY CEILING (3/7) Moody's report notes that the stable outlook is the result of the willingness of current and recent Israeli governments to trim fiscal expenditures and budget deficits in order to maintain macroeconomic stability. It anticipates that the recently re-elected coalition government led by Prime Minister Ariel Sharon will build on last year's tax reform and continue a proactive approach to structural reform of fiscal expenditures in order to compensate for challenges on the revenue side. Israel's liquidity position has not deteriorated, and the government can service the rising domestic debt of recent years without difficulty. Schiffer said that events in Iraq would almost certainly have an impact on Israeli politics and the economy. "A war will prolong economic hardships in Israel but the country would ultimately benefit from normalization of relations with Iraq," he said. SHEKEL UP
AGAINST DOLLAR; TEL AVIV STOCKS UP 4.4 PERCENT (2/28) Netanyahu is associated with free market policies, and
successfully led moves to cut the budget and reduce the deficit during his term as prime
minister, from 1996 to 1999. He made his first official statement as Minister of Finance
on Thursday, saying he would open a series of discussions with the Ministry's officials on
Friday and would also consult with business and other economic leaders. Netanyahu
inherited a portfolio with expanded authority giving him: ECONOMY
IMPROVED IN DECEMBER AND JANUARY (2/27) Central Bureau of Statistics figures show an annualized 6 percent increase in exports, excluding diamonds, in the past two months, following a 7 percent increase in October-November 2002, and a 2 percent increase in September. High-tech exports (electronics, avionics, and pharmaceuticals) rose by an annualized 16 percent, and traditional exports (food, beverages, textiles, and clothing) rose by 5 percent. Industrial output index trend figures for November-December 2002 (the last known figures) indicate an annualized increase of 3 percent. For the first time, activity in the high-tech sector has stabilized, after falling sharply earlier. Another indicator showing signs of economic recovery is imports of raw materials, which rose by an annualized 2 percent in January, after falling 1 percent in December, and 4-6 percent in August-November 2002. The decline in other indicators slowed. The fall in retail sales slowed to an annualized 3 percent in November-December 2002, after falling 5-8 percent in May-October. The trade and service revenue index fell by an annualized 5 percent in November-December, compared with a 7 percent drop in August-October, according to VAT figures. The decline encompassed all trade and services sub-sectors, except for wholesale trade, which rose. Imports of investment goods for industry (machinery, equipment, and vehicles) continued its unabated fall: imports fell by an annualized 10 percent in December-January, the same rate as in October-November. Imports of machinery and equipment fell by a more moderate annualized 3 percent in January, after falling 4-5 percent in September-December. Imports, excluding diamonds and fuel, fell by an annualized 2 percent in January, after falling 4 percent in December, and 2-7 percent in June-November. The trade deficit, excluding diamonds and fuel, totaled $224 million in January 2003, or $2.7 billion in annual terms. These last two figures indicate that the severe recession could continue at least through mid-2003. ISRAEL
IS FIRST NATION TO CURTAIL Israeli companies purchase approximately 50 percent of the world's rough diamonds, two-thirds of which are eventually exported to the US as cut and polished. Israel's total net polished diamond exports worldwide totaled $5.2 billion in 2002. POLISHED DIAMOND EXPORTS IN
2002 - $5.2B (1/1) Direct uncut diamond imports from De Beers totaled US $800 million in 2002, the same as in 2001. The proportion of uncut diamonds imported through De Beers fell to 18% in 2002, evidence of Israel’s diamond industry’s declining dependence on De Beers and increasing reliance on independent sources of diamonds. The Ministry of Trade and Industry reported that uncut diamond exports rose 60% in 2002 to US $1.6 billion. Imports of polished diamonds rose 34% to US $2.4 billion. The ministry also reported that the diamond industry’s debts to Israeli banks rose in 2002, reaching US $1.5 billion. The ministry reported that the US was the main export market for Israeli diamonds (68%), followed by Hong Kong (12%), Belgium (6%) and Japan (2%). Polished diamond exports to China rose by 190%. Supervisor of diamonds at the Ministry of Industry and Trade Udi Sheintal said the diamond industry recovered in 2002, after declining in 2001, due to the high-tech crisis and the September 11 terrorist attacks on the US. He said the industry’s export figures indicated good sales throughout the year, mostly to traditional markets in the US, Hong Kong, Belgium and Switzerland. GOLDMAN SACHS:
ISRAEL GDP GROWTH WILL RIASE 2.3% IN 2003 (12/19) ECONOMIC
INITIATIVE PROMOTES CJAED co-Director Helmi Kittani said notices about the program were published in the Palestinian press in recent months, and almost 100 applications were received. "Despite the situation, we believe dialogue should be maintained at all times," said Kittani. . "We must not burn all bridges. To the contrary, they must be preserved," he added. Israeli Arab and Jewish business people, using the premise that Israel’s diverse population provides the country with an invaluable resource, founded CJAED in 1988. Building Business Bridges will be managed academically by the University of Haifa and is funded by the European Union and the United States. ISRAELI
WINS NOBEL PRIZE IN ECONOMICS (10/10) Kahneman won the Nobel for his pioneering work on integrating insights from psychology into economics. The Royal Swedish Academy of Sciences said in its citation that "concerning human judgment and decision-making under uncertainty, he has demonstrated how human decisions may systematically depart from those predicted by standard economic theory." In addition, Kahneman and another colleague, Amos Tversky (who died in 1996), developed an alternative model, known as the prospect theory, that according to the academy "can be used to better explain behavioral patterns which appear to be anomalies from the perspective of traditional theory." Kahneman, who holds both Israeli and American citizenship, was born in Tel Aviv and received his Bachelor's degree in psychology and mathematics from the Hebrew University in Jerusalem and his Ph.D. from the University of California at Berkeley in 1961. He has taught at the Hebrew University, the University of British Columbia and was a professor at Berkeley. Kahneman has been at Princeton since 1993. DIAMOND EXPORTS SURGE 49% IN
SEPTEMBER (10/4) SHERATON HOTEL COMMITS TO ISRAEL
(10/3) "We saw good numbers, but I can't comment on them, because it is a public company and cautions is necessary. If we compare our results with our competitors, we can be satisfied and feel strong," Vos said. Sheraton Moriah Israel CEO Eli Gonen said the chain has invested $2.5 million in recent years, despite the situation. ISRAELI
WOMEN ENTREPRENEURS ON THE RISE (9/10) ECONOMY SHOWS
SIGNS OF IMPROVEMENT (8/14) Business product declined 2.3 percent from January-June, compared with an 8.4 percent fall in the first half of 2001. The drop in business product reflects lower output in the construction, industrial, and retail sectors. On the other hand, output rose in the financial services sector. Exports of goods and services were down an annualized 0.8 percent in the first half of the year. This decline is far less than the falls of 15 percent in the preceding six months and 21 percent in the first half of 2001. Total resources available to the economy (GDP and imports) rose an annualized 1.3 percent in the first half of the year, after dropping 7.3 percent in the second half of 2001. The increase in available resources reflects 6.8 percent growth in imports of goods and services, after a sharp 13 percent decline in the preceding six months. ISRAEL'S
"SIGNATURE BANK" Bank Hapoalim founded Signature Bank as part of its strategy to expand its overseas operations, especially in Europe and the U.S. Bank Hapoalim has been negotiating to acquire Israel Discount Bank of New York as part of the same strategy. WAGES
AND DISPOSABLE INCOMES DROPS FOR ISRAELIS (8/12) Checking account deposits also continued declining to a mere NIS 15.6 billion (approximately $5.2 billion) by the end of June. This represents a 9% drop, compared with NIS 17.2 billion in February. ECONOMY
EXPERIENCES According to Israeli economists, heightened private consumption was the growth engine during this period. Moreover, estimates of the serious slash in private consumption started mainly at the end of March, and the results of this trend may only become evident in the following quarters. Total exports went up 3.5 percent in the period, after consecutive falls in the previous quarters since the outbreak of Palestinian violence in the last quarter of 2000. The sharpest rise was in diamond exports, 39.6 percent, and produce, 25.7 percent. |
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