Israel’s Economy has the Power to Astound
Ambassador (ret.) Yoram Ettinger, “Second Thought: US-Israel Initiative”
inFocus Quarterly, Jewish Policy Center, Spring 2013,Â http://bit.ly/Yi5A15
Global agencies assess Israel
During 2012,Â theÂ three leading global credit rating companies, and the International Monetary Fund (IMF)Â commended Israel’s economic performanceÂ and expressedÂ confidence in its long-term viability.
On September 30, 2012,Â Standard and Poor’sÂ (S&P) reaffirmed Israel’s A+ credit rating, at a time when it lowered the credit rating of an increasing number of Western countries.Â According to S&P, “the Israeli economy continues to generate solid economic growth….Â Major security risks will be contained…. There is sufficient political will to prevent a sizable increase in the government’s debt burden…. We forecast that by the middle of the decade domestic natural gas production should contribute to improved external and fiscal balances.”
On September 3, 2012,Â Moody’sÂ sustained Israel’s A1 credit rating, stating that “Israel’s stable outlook is underpinned by the country’s high economic, institutional and government financial strength…supported by its relatively high GDP per capita [US$32, 000] and its economic resilience…. The country’s specialized-export sector is well-positioned to rebound quickly should the global environment normalize….Â Moody’s judges Israel’s susceptibility to event risk as moderate based on the political risks facing the country, both domestic and external…. Israel’s own gas production will increase substantially between 2013 and 2016.”
On April 23, 2012,Â Fitch RatingsÂ maintained Israel’s long-term foreign exchange and local currency credit rating at A and A+ respectively, despite the ongoing war on Palestinian terrorism, the Iranian nuclear threat and the raging Arab Street. Fitch cited “Israel’s strong institutions and solid recent macroeconomic performance, rich, diversified economy and strong external balance sheet against a high level of government debt and longstanding geopolitical concerns.”
On April 2, 2012, theÂ International Monetary Fund (IMF)Â published its annual report on Israel’s economy: “Israel’s economy remains strong… led by robust private consumption and buoyant investment…. Israel’s fundamentals are strong: inflation and inflation expectations are squarely within the 1-3 percent target range; unemployment is at historic lows; the net international investment position is a surplus; and public debt has fallen steadily to below 75 percent of GDP…. The Israeli financial system currently appears to be generally robust…. The current combination of external threats and the relative stability of the domestic system are propitious for strengthening the crisis management framework….”Â The IMF report adds that the recent discoveries of natural gas fields may transform Israel to a net energy exporter in coming years.
Israel’s economic indicators
While most of the world is afflicted by an economic meltdown, Israel demonstrates fiscal responsibility, sustained economic growth and a conservative, well-regulated banking system with no banking or real estate bubble.
For example, from a 450% galloping inflation in 1984, Israel managed to holdÂ inflationÂ in check — 1.6% in 2012.Â Israel’sÂ budget deficitÂ andunemploymentÂ were 4.2% and 6.9% respectively in 2012, significantly lower than the OECD average of 7% and 8%.
During the 2009-2012 global economic crisis —Â without a stimulus packageÂ and in spite of the stoppage of the natural gas supply from Egypt, which increased energy cost — Israel experienced a 14.7%