Daily Israel Report

Through War and Peace, Israel's Economy Continues to Soar

Study shows that according to nearly every economic indicator, Israel's economy continues to grow by leaps and bounds.
By Hillel Fendel
First Publish: 8/31/2014, 12:20 PM

Israel's hi-tech industry helping to power a resilient economy
Israel's hi-tech industry helping to power a resilient economy
Reuters

Wherever good news for Israel is to be found, Yoram Ettinger is there to publicize it. A long-time government consultant for US policy and projects, Ettinger now writes of a new economic study showing that "sustained, impressive growth of Israel's economy throughout the last 30 years."

The study was published earlier this month by Dr. Adam Reuter, CEO of Financial Immunities Consulting and the Chairman of Reuter-Maydan Investment House. Its main points:

* Israel's GDP catapulted from $30bn in 1984 to $300bn in 2014; per capita GDP surged from $7,000 to $38,000

* The ratio of public debt to GDP shrunk from 280% to 66%

* Foreign exchange reserves swelled from $3bn to $89bn

* Export rose from $10bn to $90bn, including an increase of high tech exports from $1bn to $28bn

* For the first time, Israel's country default spread (2.48%), reflecting the risk premium on government bonds, is similar to that of the US (2.38%).

As of now, Israel is the world's top exporter of drones; the world's co-leader (along with the US) in the development, manufacturing and launching of small and medium size satellites; the sixth largest exporter of military systems; the 2nd largest cyber exporter, as well as an emerging natural gas power.

Ettinger, a consultant to Israel’s Cabinet and Knesset Members on US-Israel bilateral projects, US policy and Mideast politics, says, "Time is working for Israel. The economic indicators from 1948 until today confirm that Israel has experienced splendid economic integration, and unprecedented economic growth, in defiance of ongoing war, terrorism, boycotts and international pressure.”

The impact of war on Israel's economy, as measured after the 2006 Lebanon War and the previous two mini-wars in Gaza in 2009 and 2012, has been one of an abrupt, short-lived crisis followed by a speedy recovery – i.e., a "V" and not a "U" shaped graph.

For example, the 2006 war against Hezbollah triggered an immediate drop of GDP from over 6% to a negative growth of 1.5% - followed by a swift recovery to almost 10% growth in the following quarter. The just-ended war is estimated to cause a half-percent drop in Israel's 2014 GDP, but is expected to have insignificant influence on foreign investors, most of whom seek Israeli high-tech companies, which are minimally vulnerable to rocket and missile fire.

"In contrast to those who wish to boycott Israel," Ettinger concludes, "2013-14 have highlighted Israel's expanding trade and investment global network, especially with the surging economies of China, India and South Korea."