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Israel’s Credit Rating Reaffirmed

 1.  Israel’s credit rating has been reaffirmed at A+ by “Standard and Poor,” at a time when S&P lowers the credit rating of an increasing number of Western countries.  According to S&P, “the Israeli economy continues to generate solid economic growth and enjoy a net external asset position, even though the current account has temporarily turned negative. The stable outlook reflects our view that there is sufficient political will to prevent a sizable increase in the government’s debt burden, and that major security risks will be contained.” S&P noted that “there has been fiscal slippage on account of lower government revenues,” but added, “recent austerity measures and current growth levels should ensure that debt ratios modestly improve in the medium term.” Referring to the most important economic development in Israel in recent times, the discovery of large offshore gas reserves, S&P said, “We forecast that by the middle of the decade domestic natural gas production should contribute to improved external and fiscal balances (Globes Business Daily, September 30, 2012).”

2.  Israel’s GDP grew by 3.4% during the 2nd quarter of 2012, compared with 3.1% and 3.2% during the 1st quarter of 2012 and the 4th quarter of 2011 (Globes, Sept. 20) . While unemployment trends upward towards 7% – which is significantly lower than OECD countries – housing demand has peaked, in August, to a 13 year record (Globes, Sept. 28).  Israel’s export is impacted by the global meltdown in general and Europe’s intensified economic crisis in particular.  However, while export to Europe declined by 21% during July-August, 2012, compared with July-August, 2011, export to the USA surged by 16% during the same period and by 31% compared with May-June, 2012.  Total export ($7.7BN) decreased by 3.5% during July-August, 2012 (Israel Hayom, Oct. 3).

3.  According to the 2012 OECD report , Education at Glance, Israel is ranked 2nd in the number of adults (25-64 year old) with academic degrees, trailing Canada, but ahead of all other OECD countries (Israel Hayom, Sept. 12).

4.  eBay CEO John Donahoe at Israel’s Advanced Technology Conference in Jerusalem (Bloomberg, Sept. 11):  the Israel R&D centers of eBay and its subsidiary PayPal will continue to help drive the company’s innovation in commerce and payment in the foreseeable future. Those centers are based largely on Israeli start-ups acquired by eBay, including Shopping.Com, The Gifts Project and Fraud Sciences. Those centers, employing 340 people, work on everything from EBay’s global social activities to cataloguing and data to search mechanisms as well as security and risk management.  Donahoe is looking forward to partnering with more Israeli entrepreneurs to help further spur the future of retail and commerce.

5.  Cisco Systems, the Silicon Valley-based Greylock Partners and the Englewood, CO-based Liberty Global participated in the $24MN 5th round of private placement by Israel’s Celeno (Globes, Sept. 28). Kazakhstan’s Kenges Rakishev invested $20MN in Israel’s Mobli.  Additional investors in Mobli are Leonardo DiCaprio, Tobey McGuire and Serena Williams.  In August, Rakishev invested $5MN in Israel’s TriPlay (Globes, September 20).  The Radnor, PA-based New Spring Capital, the Menlo Park, CA-based Menlo Ventures and the Palo Alto, CA-based Trident Capital participated in a $12MN 3rd round by Israel’s eXelate (Globes, Sept. 25). Switzerland’s ABB will invest $10MN in an Israeli solar project (Globes, Sept. 3). Motorola Solutions led a $4MN round by Israel’s AgentVi (Globes, Sept. 12). 

 




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Israel’s Covid-19 Economic Trends

Straight from the Jerusalem Boardroom #248
https://bit.ly/3u29k9g

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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