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The International Monetary Fund (IMF) Praising Israel’s Economy

IMF Country Report on Israel, April 2012: 

“Israel’s economy remains strong with GDP growing 4.7 percent in 2011, led by robust private consumption and buoyant investment. However, the global downturn is slowing Israeli growth, with 2012 GDP growth expected at 2.8 percent.

Israel’s fundamentals are strong: inflation and inflation expectations are squarely within the 1-3 percent target range; unemployment is at historic lows; the net international investment position is a surplus; and public debt has fallen steadily to below 75 percent of GDP.

These strengths are also underpinned by Israel’s sound institutional frameworks, including fiscal rules and a new central bank law. Furthermore, following recent discoveries of natural gas fields, Israel may become a net energy exporter in coming years…

Following a mild recession in early 2009, output started recovering in mid-2009 and continued to grow strongly through the first part of 2011. Unemployment fell to comparatively low levels [5.6%], inflationary pressures became apparent, house prices increased rapidly (more than 40% in real terms since 2008), and strong capital inflows continued even during periods of heightened regional tension….

The general robustness of the system was demonstrated in the 2002 and 2009 recessions. Risk factors relating to high public debt and continent pension liabilities have diminished in relative importance…

The Israeli financial system currently appears to be generally robust, but faces an unusually uncertain and dangerous global economic environment. While Israel’s direct exposure to the most vulnerable countries is minor, there is a clear risk of a recession in Israel’s main trading partners in Europe and the United States, heightened risk aversion in financial markets, and difficult funding conditions. Moreover, Israel lives with persistent regional geopolitical risks, which would have economic repercussions if realized. Stability analysis suggests that systemic financial vulnerabilities to severe shocks in line with historical experience are manageable; in aggregate, buffers (including those in the household sector) are at comparatively comfortable levels

A variety of stress tests for banks, insurance companies, and long-term savings funds were undertaken. The calibration of these tests was demanding, but only a few individual institutions were projected to suffer major losses or to become relatively short of liquidity. The authorities already operate an effective, pro-active, and sophisticated system of financial sector oversight, which, however, needs to be developed further in some areas. The level of observance of the main international financial supervisory standards was assessed to be high…

The current combination of external threats and the relative stability of the domestic system are propitious for strengthening the crisis management framework…. The global crisis affected Israel’s economy, but no domestic financial institution got into serious difficulties during the crisis. Banks weathered the storm of the global crisis, although profitability suffered. In part, the relatively robust performance was due to the short-lived recession and the characteristics of Israel’s banking system, namely, banks’ conservative management; reliance on deposit funding and the small interbank and wholesale funding markets; lack of complex asset and securitized markets; and strong and intrusive bank supervision




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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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