ISRAEL’S ECONOMY CONTINUES TO GROW.
IS IT COUNTER-INTUITIVE?
By Sherwin Pomerantz
Israel’s
Central Bureau of Statistics late last week released a report indicating that
the country’s economy grew by 3.2% in the second quarter of this year, an
increase of the prior quarter’s figure of 2.8%.
One of the prime factors in this growth was a 10.3% annualized growth
rate of Israel’s exports and a 5.4% rise in personal expenditures.
On
the surface this seems to be counter-intuitive.
It would have been reasonable to expect, for example, that the slowdown
in the economies of the US and Europe, two of Israel’s largest export
destinations, would have a negative ripple effect on our economy here. In addition, the constant dialogue in the
press, both locally and internationally, about the possible run up to war with
Iran would also be expected to dampen economic growth. And yet the growth rate increased, clearly
counter intuitively.
These
figures do not reflect what was expected to be a downturn in July and August
(i.e. the 3rd quarter of the year) and even with this growth the
economy, overall, is going through a contraction relative to 2011. On the positive side however, Israel in 2012 will
have its best year ever as a tourist destination. Hotels are running close to capacity, measurements
of the population here show high levels of happiness and satisfaction,
unemployment remains relatively low and foreign direct investment continues
unabated. So what is really going on?
Nobody,
of course, is endowed with the gift of prophecy when it comes to economic forecasting
or anything else but thriving businesses generally look at the long term when
making their investment plans, rather than short term blips in the market. If one looks, for example, at the mission of
the Coca-Cola Company, the very first statement they make is “To continue to
thrive as a business over the next ten years and beyond, we must look ahead,
understand the trends and forces that will shape our business in the future and
move swiftly to prepare for what’s to come….. our 2020 Vision…creates a
long-term destination for our business.”
Israel,
of course, is also seen as a very resilient community quite practiced in
dealing with the idiosyncratic issues unique to this socio-political
environment. For example, during the
Gulf War in 1990-1991 Intel Israel, the largest overseas employer in the
country, did not suffer the loss of even one day of production. The fact that this economy continues to grow
is testimony to the faith that the business community has in Israel’s long term
viability in spite of the recent global economic slowdown and the ever present
military threats.
Predicting
the future is always risky and all of us believe that we are basing our decisions
on facts. But as Malcolm Forbes once
said “Anyone who says businessmen deal in facts, not fiction, has never read
old five year projections.”
Sherwin
Pomerantz is president of Atid-EDI Ltd., a Jerusalem-based economic development
consulting group with 20 years’ experience in assisting overseas companies and
public entities in their export promotion and business development
efforts.
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