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Confident Navigation through Global Economic Crisis

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Tuesday, March 2nd, 2010

YovalStinmintzVideoAs reported by TLV Insider, the Israeli economy has bounced back from last years GFC. At the beginning of 2009, things looked very difficult or even gloomy, but since then, the government adopted a new economic policy. Instead of spending hundreds of billions of dollars, or in our case, of shekels, on stimulus plans to the short term, it is better to focus on long term and even longer term economic planning, and creating expectations. So, we did go to a two years budget in order to handle the crisis and to transmit some kind of confidence. We did go to a five years reducing deficit plan, and to a seven years tax plan.
We might become the first country in the world to go to a two years budget, and by the way, the IMF delegations that just visited Israel were very supportive about this issue.

The Capital Market and The Real Economy

I don’t think that you can make a distinction between the stock market and the real economy and if there is a significant recovery in the stock market, I believe that this is a response to a very nice recovery in the real economy. You know, our export was declining 30% which is dramatic, but now it is almost recovered.

The real goal is not just recovery; the real goal is to improve the Israeli economy and to come out from the crisis with a healthier and more competitive economy. We were very fortunate to be able to keep our good rating in all the three major rating fields and still more important, during the crisis, unlike many other countries that their debts ratio was climbing 100% in America and in Europe, in Israel until now it is less than 1%.

About Technology
We are very keen to preserve the leading position of the Israeli’s hi-tech industries in the future. We think that this is our first priority and we are doing a lot in order to secure it. The only semi-stimulus plan during the crisis was to put more money in research and development, more governmental money in research and development, in order to compensate, to the little decline in research and development in different Israeli companies during the crisis.

Debt Ratio
Initially our debts ratio to the GDP was high, almost 80%, but since we did focus on long term planning and not on emergency steps on stimulus plans that are very costly, one of the most important achievement is that we are going out of this crisis without raising our national debts and we hope in the future to reduce it further more in the direction of 60%.

Privatization
I think privatization of the banking system will take place, I mean the rest of the banking system will take place in 2010, and we think also of privatizing “Taas” (IMI- Israeli military industries), one of our defense industries, and to start privatizing Israel’s three sea ports and hopefully we will achieve all this in 2010.

Looking at 2010

We are already growing in a tempo of between 2.5%-3% currently and in the middle of 2010 we hope to achieve even faster growth of 4%, which is already significant economic growth, and of course there will be some aftershocks of the global crisis in the world and we might be affected, but since we already witnessed a very significant recovery, also in our export, in the hi-tech sector, actually in most sectors, we believe that this will proceed and even accelerate especially towards the second half of 2010, so I think, generally speaking, we can be optimistic regarding the Israeli economy.