ISRAEL’S EXPORT slowdown is attributable to the shekel appreciation against the dollar and the slowdown of American demand, but the economy should nonetheless grow by 4.4% this year, according to information provided by credit insurer Coface. “Private demand underpinned by the decline of unemployment will be the main growth engine, but failure to resolve the conflict with the Palestinians has fostered a climate of insecurity that weighs on Israel's economic potential,” says the report. What counts in Israel’s favour is a highly skilled workforce that enables the country to hold leadership positions in technologically advanced and intermediate high value-added products. Coupled with the continued political and financial backing of the United States and the Diaspora the business climate has remained good with the Coface payment incident index remaining below the world average. The consolidation of government finances is well under way but a decline in revenues this year due to the growth slowdown could result in a public deficit larger than in 2007. “Despite deterioration of the current account balance, the external financial situation remains good, with the risk of a foreign exchange liquidity crisis manageable since the sources of external financing are relatively stable,” says Coface. “The government coalition, meanwhile, remains weak and early parliamentary elections could take place before 2010. A change in government would, however, be unlikely to jeopardise current economic policies.” Israel is South Africa’s largest trading partner in the Middle East with exports totalling R3.429 billion and imports totalling R1.516 billion for the first six months of this year. The bulk of exports comprise gemstones, precious metals and other minerals while imports are mainly chemical and allied products as well as mechanical machinery and equipment.
