How is Israel\'s economy faring during this mini-war? A recent report by the Ministry of Industry and Trade (MOIT) finds that it\'s doing quite well, thanks. Among some of the data: There are around 4,000 high-tech companies in Israel, the highest concentration outside California. The Israeli shekel was one of the strongest currencies in the world last year, appreciating 2.87% compared to the dollar, and almost 11% compared to the Euro. Exports rose in 2000 by 24.4%, while foreign currency reserves reached an all-time high of $22.93 billion. The Tel Aviv Stock Exchange (TASE) was the 6th-best performing market, according to Merrill Lynch\'s year-end report, and Israel\'s zero inflation rate was the lowest level since 1951. Ratings companies such as Salomon Smith Barney and Moody\'s have, as recently as last month, reaffirmed Israel\'s credit rating. Exports for the fourth quarter of 2000 were $7.7 billion, up by 16.3% compared to the same period the year before.
What has been affected, asks the MOIT report? Only agriculture and construction, industries that rely on Arab employment, have experienced a slowdown; Palestinians comprise only 1% of the Israeli industrial workforce. The Bank of Israel estimates that the disturbances have resulted in a once-off cost to the economy of approximately 1% of GDP, still leaving a healthy 5.9% GDP figure for 2000 - a per capita growth rate of 3.4%. The Federation of Israeli Chambers of Commerce estimates the total cost to Israel at $2 billion: $1 billion in tourism, $750 million in construction, and $250 million in exports to the Palestinian Authority. During the first nine months of 2000, tourism arrivals increased by 25%, but during the remaining three months, it dropped 54% compared to the same period in 1999.
The International Monetary Fund Report of May 2001 concludes, \"The exchange rate, inflation, and market-based inflation expectations have exhibited remarkable stability. This is no doubt a reflection of the authorities\' success in establishing credibility, on both the fiscal and monetary policy fronts, for which they should be highly commended. [There is] optimism that the Israeli economy will emerge from the current downturn with financial stability intact, and poised for a resumption of rapid, sustainable output growth… The Israeli economy is mature, stable and strong. Barring an unlikely serious deterioration of the situation, the effects on the economy will be relatively mild and should not affect fundamentals.\"