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Moody’s Report on Israel and the G-20

1.  While Israel is concerned about growing budget deficit and unemployment, Moody’s September 3, 2012 annual credit report on Israel, states:

*”Israel’s A1 government bond rating and stable outlook are underpinned by the country’s high economic, institutional and government financial strength. [However], the rating is constrained by significant social and political challenges, which lead to moderate susceptibility to event risk….”

*“Israel’s high economic strength is supported by its relatively high GDP per capita (US$31,200 in 2011) and its economic resilience, which has been illustrated in recent years during frequent economic and political shocks. However, this resilience is being challenged once again by the ongoing euro zone debt crisis and the concurrent slowdown in the global economy.”

*“Moody’s points out that the Israeli economy’s pace of recovery following the global recession in 2009 has slowed as the contribution of net exports became a drag on the economy last year for the first time since 2007, a trend continued into the first quarter of this year. Capital inflows have diminished and the current account surplus has disappeared in 2012, the latter partly a result of the need to replace Egyptian gas imports following that country’s revolution. As a consequence, the real GDP growth rate dropped to 3% in H1 2012 from an average of 4.8% during 2010-11. Nonetheless, the country’s specialized export sector is well-positioned to rebound quickly should the global environment normalize….”

*“Moody’s assesses Israel’s government financial strength as being high thanks to the improving debt trajectory, the favorable debt composition and the comfortable debt service schedule…. Additional spending has been allocated to address the acute problems in the housing sector, related primarily to affordability. Other social spending hikes in response to last year’s widespread popular demonstrations and secular increases, mainly associated with demographic trends, will require strict prioritization to conform to the fiscal rule that sets a ceiling on the growth of government spending.”

*”Moody’s judges Israel’s susceptibility to event risk as moderate based on the political risks facing the country, both domestic and external. The Arab Spring revolutions have ironically created problems for Israel, for whom the 1979 peace treaty with Egypt has been critical to its security framework. The violent uprising in Syria and concerns about Iran’s nuclear program, have led the government to maintain a high level of defense spending, representing about 15% of total government expenditure. However, the negative impact of the cutoff of Egyptian gas supplies on the Israeli balance of payments will be more than offset as Israel’s own gas production increases substantially between 2013 and 2016.”

2.  Moody’s August 30, 2012 assessment of the economic performance of the G-20 countries:

*”We expect the G-20 advanced economies to grow by around 1.4% in 2012 and 2.0% in 2013, comparable to the 1.3% growth in 2011 and significantly lower than the 3.0% growth in 2010. We expect the prolonged financial market volatility stemming from the sovereign debt crisis in the euro area to continue to depress consumer and business confidence, and the high level of uncertainty to continue to weigh on investment and hiring decisions. Along with ongoing deleveraging efforts in the public and private sectors, persistently high unemployment levels, and real-estate market weakness in a number of countries, these developments will continue to constrain growth in advanced economies.…”

*”The risk of a deeper than currently expected euro area recession remains significant. The risk of further financial market turbulence in the euro area also remains elevated, given the need for fiscal consolidation measures in an environment of weak economic growth, which raises implementation risks. Furthermore, political and financial uncertainty in Greece and potential funding stress in Spain and Italy have increased the risk of severe economic and financial dislocations in the euro area….”




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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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