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At 65 Israel Defies Global Economic Meltdown

While most of the world is afflicted by an economic meltdown, Israel demonstrates fiscal responsibility, sustained economic growth with no stimulus package and a conservative, well-regulated banking system with no banking or real estate bubble. 

At 65, Israel’s credit rating is sustained by the three leading global credit rating companies: Standard and Poor’s (S&P), Moody’s and Fitch Ratings . Moreover, the International Monetary Fund (IMF) commends Israel’s economic performance and expressed confidence in its long-term viability. 

Kasper Villiger, Chairman of the United Bank of Switzerland (UBS) indicated that China, Hong Kong, Brazil, Russia and Israel are the future growth engines for UBS. Deloitte Touche, one of the top four global CPA firms opined that Israel is the fourth most attractive site for overseas investors.The Swiss-based Institute for Management Development (IMD) ranks the Bank of Israel (Israel’s “Federal Reserve”) among the top five central banks in its 2012 World Competitiveness Yearbook for the third year in a row.

At 65, Israel’s economic indicators are among the world’s best. For example, during the 2009-2012 global economic crisis Israel experienced a 14.7% growth of gross domestic product (GDP), the highest among OECD countries. Israel’s 2012 GDP growth (3.3%) led the OECD which averaged 1.4%. Israel’s 2012 GDP of $250BN catapulted 120 times since 1948. A $1,132 GDP per capita in 1962 surged to $32,000 in 2012Israel managed to reduce its debt/GDP ratio from 100% in 2002 to 74% in 2012, while most of the world experiences a soaring ratio. A 450% galloping inflation in 1984 has been held in check in recent years – 1.6% in 2012. Israel’s 2012 budget deficit and unemployment were 4.2% and 6.9% respectively, much lower than the OECD average of 7% and 8%. Foreign exchange reserves – which are critical to sustain global confidence in Israel’s economy and Israel’s capabilities during emergencies – expanded from $25BN in 2004 to $75BN in 2012, 26th in the world and one of the top per capita countries.

At 65, Israel’s robust demography – which leads the Free World with three births per Jewish woman – provides a tailwind for Israel’s economy.

At 65, Israel attracts the elite of global high-tech due to its competitive edge. For instance, the prestigious Shanghai Jiaotong University’s Academic Ranking of World Universities includes four Israeli universities among the top thirty computer science universities in the world. Twenty universities are from the US, four from Israel, two each from Canada and the UK and one each from Switzerland and Hong Kong. 


At 65, Israel leads the world in its research and development manpower per capita
: 140 Israelis (per 10,000) and 85 Americans (per 10,000) are ahead of the rest of the world. Israel’s qualitative workforce benefits from the
annual Aliya (immigration of Jews) of skilled persons from the former USSR, Europe, the USA, Latin America and Australia, who join graduates from Israeli institutions of higher learning.  In addition, Israel’s high-tech absorbs veterans of the elite high-tech units of Israel Defense Forces. Israel dedicates 4.5% of its GDP to research and development, the highest proportion in the world.

Israel’s defiance of unique security and economic challenges
has produced unique, innovative and cutting edge solutions, technologies and production lines, which have attracted global giants. For example,
Eric Schmidt, Google’s Executive Chairman, considers Israel “the most important high-tech center in the world after the US.” He has invested in Israel’s high-tech via his own private venture capital fund, Innovation Endeavors. 

According to world renowned investor,
Warren Buffet, If you’re looking for brains, [Israel] has a disproportionate amount of brains and energy.” In 2006, Berkshire Hathaway, Buffett’s investment company, made its first ever acquisition outside the US, in Israel, acquiring 80% of Israel’s Iscar for $4 billion. 

Intel
operates four research and development centers and two manufacturing plants in Israel, and invested in 64 Israeli start ups.
Microsoft’s CEO, Steve Ballmer calls Microsoft as much an Israeli company as an American company, because of the importance of its Israeli technologies. Some 300 US high tech giants have research and development presence in Israel. Many, among them, invest in – and acquire – Israeli high tech companies.

George Gilder, the author ofThe Israel Testand a high-tech guru, stated: “[Israel] is the global master of microchip design, network algorithms and medical instruments…water recycling and desalinization…missile defense, robotic warfare, and UAVs.… We need Israel as much as it needs us.”

At 65, Israel has become an
offshore natural gas producer, which has enhanced its economic viability, reducing its dependency on imported energy, and rendering it a net natural gas exporter by 2017.
At 65, the ongoing wars, terrorism and global pressure are realistically assessed as bumps on the road to unprecedented economic and technological growth.
 
 



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Foreign investment in Israel’s high-tech companies surged to new heights in the 1st quarter of 2021 – $5.7bn in 172 deals – which is up 89% over the impressive 4th quarter of 2020 and double the volume of the 1st quarter of 2020.

2020 was the first year of surpassing $10bn in capital raised by the Israeli high-tech sector from investors in the US, Asia and Europe, who trust the maturity of Israel’s brain power. Investments in Israeli companies more than tripled in six years, reflecting the effective response by Israeli startups to the technological, medical, pharmaceutical, educational, social and digital challenges posed by Covid-19.

Israel’s economic performance in defiance of Covid-19 is presented by Dr. Adam Reuter, the Chairman and Founder of “Financial Immunities,” Israel’s largest financial-risk management firm, and the co-author of Israel – Island of Success:

  1. Israel has led the globe in the rapid administration of Covid-19 vaccinations due to effective negotiations with Pfizer and an efficient, country-wide medical infrastructure.
  2. Israel is the second lowest among OECD countries in the number of Covid-19 deaths per number of Covid-19 cases: 0.7% compared to the 2.3% OECD average. Israel features a young population (median age of 30 compared to the OECD’s 42) and an effective country-wide medical infrastructure, including top level HMOs and hospitals.
  3. Israel is ranked 12th from the bottom among the 37 OECD countries in the number of deaths per million inhabitants: 645 compared to 1,145 OECD average.
  4. The International Monetary Fund’s 2025 GDP growth forecast for OECD countries: Israel – 4%, OECD average – 2.2%, US – 1.8%, Australia – 2.5%, Ireland – 2.6%, France and Canada – 1.7%, the UK – 1.6%, Germany – 1.2%, etc.
  5. Israel’s 2020 GDP was reduced by 2.5%, compared to the OECD average reduction of 4.1%, South Korea – 1%, Norway – 0.8%, Australia – 2.6%, US – 3.5%, Japan – 4.8%, Germany – 5%, France – 8%, the UK – 10% reduction, etc. GDP growth was recorded in New Zealand – 2.4% and Ireland – 3.5%.
  6. In 2020, Israel was ranked 20th among the 37 members of the OECD in terms of GDP per capita, featuring $43,000 (GDP – $408bn), ahead of Japan, Italy and Spain, and very close behind the UK ($44,000) and France ($45,000).
  7. Israel’s debt-to-GDP ratio increased from 60% in 2019 to 72% in 2020, compared to the OECD’s average increase from 66% to 82%. The 2020’s debt-to-GDP ratio was 266% in Japan, Italy – 161%, the US – 131%, Germany – 73%, etc.
  8. Israel’s foreign exchange reserves-to-GDP ratio of 41% (3rd among the OECD countries) attests to its financial stability, and Israel’s capability to raise foreign credit promptly in a cost-effective manner. Israel’s foreign exchange reserves in March 2021 – $186bn.
  9. During the past decade, Standard and Poor (S&P) accorded Israel a positive credit rating trend, unlike the negative trend for the G-7 countries. In 2020, notwithstanding Covid-19, Israel’s credit rating (S&P) remained at AA.
  10. Some 380 global high-tech giants operate in Israel, including Microsoft, Amazon, IBM, Intel, Cisco, Apple, Verizon, Applied Materials, Dell, HP, Kodak, Oracle, Philips, SAP, Medtronics, GM, eBay, GE, etc. Israel leads the world in the ratio of research and development investment to GDP: 4.9%. 85% of this investment comes from the business sector.

 




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