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Yoram Ettinger: The British Financial Times praises Israel’s economy

Yoram Ettinger

Ambassador (ret.) Yoram Ettinger, “Second Thought: a US-Israel Initiative”
Straight from the Jerusalem Boardroom #242

According to the British daily Financial Times (August 28, 2019), the Israeli shekel ranks as the best performing currency against the US dollar among 31 major currencies tracked by Bloomberg, up almost 6%, as fund managers have sought refuge from global economic turmoil.  The shekel had strengthen thanks to Israel’s perceived status as an emerging markets’ safe haven and improved economic fundamentals such as:

*A long term expansion in employment;
*Current account surpluses;
*A fall in the Debt-to-GDP ratio under a 16-year-old fiscal stabilization program;
*Bank of Israel raised interest rate once since 2011, allowing it to hover near zero (0.25%) for years, as the economy reaches near full-employment.

The British daily quotes Win Thin, Head of Currency strategy at New York’s Brown Brothers Harriman: “Israel is one of the best of the lot among emerging markets.  It is stable and away from the fray of the trade wars. It has just been a good solid story.”

The Financial Times adds: “The haven status appears to be decoupled from political instability, including growing tensions with Iran; air and drone strikes attributed to the Israeli military in Syria, Lebanon and Iraq; inconclusive elections last April, and the possibility of Prime Minister Netanyahu facing indictment for alleged bribery and fraud.

“But, as investors fret about a global recession, the country’s tech-heavy export-driven economy has remained relatively immune.  High-value exports, including military hardware, are generally unaffected by sudden appreciation in local currency, and are often priced in US dollars to begin with.

“Foreign investment has held steady… and Israel continues to prepare for exports from natural gas deposits that are coming online, including a $15BN contract to supply Egypt by early 2019. Such positive factors are pushing the shekel higher.

“This year’s next best performing major currencies, after the shekel, are the Russian rouble, Japanese Yen and the Canadian dollar.”



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