Israel is the New Asian Tiger



By: YOSEF TASTASSA  
Published: February 17th 2011
in Economics » Israel

Israel joins China and India as the economic tigers

7.8 per cent growth per year

 

The early statistical indicators and economic estimations showed that the Israeli economy grew in the last quarter of 2010 by 4.2 per cent. Then the real numbers were published and everyone was in awe.

 

The Israeli economy surged in the last quarter of 2010 by 7.8 per year. The growth pace is almost double the early estimations. It shows that the economy is healthy, strong and competing well in the global markets. The growth is especially impressive when looking at Israel's geopolitical situation.

 

Bank of Israel

 

A lot of positives should be spoken about the Bank of Israel, whose responsible behavior in monitoring the financial system prevented unnecessary monetary crises and also enabled the economy to grow at the blazing pace in which it did.

 

Prof. Stanley Fischer, The Bank of Israel Governor was clever enough to keep the Shekel exchange rate low against the US dollar. He bought over $70 billion USD in the last couple of years for that purpose. Now the Israeli foreign currency reserves are high, a fact that increases the confidence in the Israeli ability to overcome future financial crises. In addition, the relatively weak Shekel boosted the exporting sector and kept the local Israeli labor sector safe.

 

Foreign investments

 

Yesterday we wrote about George Soros investing in the Israeli energy sector. Yet Soros is not the only one to do so. Many foreigners are investing in the Israeli banking system, the industrial sector and the Israeli government bonds.

 

The pharmaceutical industry is also well exposed to foreign investments. Earlier today it was reported that the legendary investor John Paulson invested $230 million USD in "Teva Pharmaceutical" via the NASDAQ stock exchange. Teva has many development and production centres in Israel and Paulson's huge investment summarize it all.

 

Future challenges

 

Despite the flattering figures, Israelis should not rest on the "Peak of the Olympus" mountain. The real estate sector which has surged dramatically in the last three years should be regulated in order to enable young couples to have their own homes for a reasonable price.

 

Systems need deep reforms in order that future generations will be able to compete in tomorrow's world. Taxes are still relatively high and they should be transferred to productive sectors.

 

The Chief Scientist budgets should be also increased by hundreds of per cents in order to support young entrepreneurs in their early stages. We must remember that the founders of Israel’s Checkpoints were young soldiers who earned barely $100 per month. Today, Checkpoints market value in the New-York markets is nearly $900 million. This is not an isolated story and is what makes Israel unique on a global scale and must be nourished.

 

Be proud

 

Despite the future obstacles and challenges we can all be proud that this young nation, barely 62 years old, who went through many wars and built its infrastructure from scrap is now a leading tech country in many fields and is challenging the growth rates of China and India – Israel is the new tiger on the list.

 

Summary

 

The Israeli economy is facing an economic boost in all the major indicators. The laws of free market along with an effective and responsible regulation system enabled this to happen. Now is the time to invest in the Jewish state and to support its implausible industries.



Related articles: (Israel, Economy, Growth, )




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