Israel remained relatively free from severe damage in the worldwide financial crisis and stands to be one of the world’s safest places for investors, Bank of Israel Governor Stanley Fischer told Fox News.
He took partial credit for Israel’s economic stability, noting that his massive purchase of dollars in the past year along with the government’s spending limitations helped avert a serious crisis. The economy is in a recession and thousands of people are out of work, but recovery appears to be around the corner.
Major Tel Aviv Stock Exchange indexes still are 30 percent higher than they were five years ago while American shares generally have lost value.
“I feel much, much better that if there’s any [future] crisis, we are in a very strong position, much stronger than a year ago, because of our currency purchases,” Fischer told Fox.
The Standard & Poor financial services company affirmed Israel’s stability last week and retained the government’s “double A” bond rating. Its conclusion partly “rests on Israel's proven economic resilience in the past, including the bust of the technology boom, the second Intifada, and the incursions in South Lebanon and in Gaza all during the past decade,” S&P reported.
“Israel also draws credit strength from its relationship with the U.S., which recently extended its loan guaranteed program, under which there remains $3.8 billion available, until 2011/2012," according to S&P. It also expects “that Israel and the world community will confront Iran over its nuclear program solely in the diplomatic realm.”
It predicts that the recession will end this year and that growth in 2010 will be about 1 percent. Finance Ministry economists estimate that the economy will continue to grow at the same rate for each of the next five years, adding approximately 2,000 jobs every year.
Fischer said that the central bank continues to focus on price stability, with the consumer price index remaining below the maximum target of 3 percent.
He noted that several foreign companies, such as Microsoft, Yahoo and Google have recently opened production and development centers in the Jewish state.
Israel is “a safe place to invest,” Fischer stated. “Americans tend to be very concerned about pictures on TV of the violence. In terms of capital investment, exporting and importing, that part of business is relatively easy. [Israel has] a highly-skilled work force that’s highly motivated. It’s an exciting place, but most impressive is the talent and the interesting people.”