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Israel’s Economy in Defiance of COVID 19

Straight from the Jerusalem Boardroom #247

According to 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. A direct correlation exists between the level of Nasdaq, on the one hand, and the strength of Israel’s Shekel, on the other hand. The higher the level of Nasdaq, the more US funds are available for investment in Israel’s hightech sector. Israel has become a unique source of innovative research and development – as well as an engine of export enhancement – for major US hightech companies.
  2. Israel’s export is expected to approach an all-time high of $132BN in 2020 – while import has declined substantially – due to the surge of the hightech sector. 10% of Israel’s working manpower is directly employed by the hightech sector (double the level employed in other OECD countries) with a substantial number of people, who are indirectly involved in hightech.
  3. Direct foreign investment in Israel in 2020 is 20% higher than 2019 – approaching $25BN, of which $9.5BN-$10BN are hightech investment (20% higher than 2019). Since 2000, US businesses and individuals have invested over $100BN in Israel’s hightech sector.
  4. Israel’s foreign exchange reserves as a percentage of GDP is 3rd among OECD countries. Israel’s total foreign exchange reserves are at an all-time high at $170BN, of which $17BN was acquired in 2020. Notwithstanding the unprecedented dollar acquisition by Bank of Israel – but due to the unprecedented level of foreign investment – Israel’s Shekel is gaining strength: 3.81 per US Dollar on March 17, 2020 and 3.23 on December 22, 2020.
  5. Israel’s national debt-to-GDP ratio was 60%, before the arrival of COVID 19, compared to 109% for the USA. In December 2020, it is 76%, compared to 131% for the USA.
  6. Israel’s public savings in 2020 has increased by 1.4% compared to 2019.
  7. The IMF’s outlook report for 2025: Israel – 4% GDP growth ($500BN annual GDP), Turkey, Columbia, Latvia and Estonia – 3%, Ireland and Australia – 2.5%, OECD average – 2.1%, Sweden – 2%, USA – 1.75%, France – 1.7%, Canada – 1.7%, Switzerland – 1.3%, Germany – 1.2%.
  8. Standard & Poor’s (S&P) international rating agency reaffirmed Israel’s credit rating of a stable AA-, despite the impact of COVID 19, the growing budget deficit and domestic political instability, but due to Israel’s thriving hightech industries, strong external accounts, the deep pool of domestic savings, the effects of the recent peace accords and the expansion of natural gas investment and export (e.g., Chevron’s acquisition of Nobel Energy’s offshore assets in the Eastern Mediterranean, which has geopolitical and economic implications).

Fitch and Moody’s international rating companies sustained their stable A+ and stable A1 credit ratings for Israel, respectively.

  1. Israel’s peace treaties with the United Arab Emirates and Bahrain are expected to add 0.25% ($1BN) to Israel’s GDP through agricultural and hightech export, hightech investment, oil import and mutual tourism.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




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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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