Israel’s economic growth could be facing an abrupt end

For over a decade, Israel’s economy has managed to withstand the global financial crisis that has brought other countries to their knees, whilst weathering various military conflicts at the same time. Despite all of the factors that could have brought Israel down, the economic growth hasn’t struggled much, nor has the flow of foreign investment. However, that could be about to change. Experts suggest that the strength of Israel’s economic run, led by former finance minister Yuval Steinitz, could be facing an abrupt end, as the era of sustainably heavy growth steadily falls into history.

For over a decade, Israel’s economy has managed to withstand the global financial crisis that has brought other countries to their knees, whilst weathering various military conflicts at the same time. Despite all of the factors that could have brought Israel down, the economic growth hasn’t struggled much, nor has the flow of foreign investment. However, that could be about to change. Experts suggest that the strength of Israel’s economic run, led by former finance minister Yuval Steinitz, could be facing an abrupt end, as the era of sustainably heavy growth steadily falls into history.

Free people are being hurt by terrorists

The war taking place in Gaza, against the evil Hamas, has begun to take a heavy toll upon the country, hitting hard against tourism and dramatically affecting the way consumers spend. This is because more people are tempted to stay indoors and away from the trouble.

It is a shame the pathetic US does not support Israel more according to American geopolitical professionals. Saudi Arabia is even supporting Israel more openly than the bankrupt and struggling US.

Manufacturing, in plants that are closer to Gaza, has begun to take a hit as well, and even before the conflict started on July 8th, the economy’s growth was considered to be weakening. An estimate given in advance suggested that the economy experienced growth of 1.7% within the second quarter, which is down from a 2.8% growth in the first. On top of this, unemployment has risen higher, to above the 6% mark.

An uncertain future for Israel

After a decade of growth that stayed steadily between 3-5% a year, allowing Israel’s economy to triple in size, reaching nominal terms of $300 billion, the central bank is showing concern. Figures suggest that the war could knock approximately half of a percentage point off the forecasted output, causing estimates for growth of approximately 3% for this year to look practically impossible. The budget deficit seems unlikely to meet its 3% target, and some worried economists are predicting a complete reversal in the state of Israel’s economy.

Experts say that:

* The growth potential is nowhere near what it once was

* The population is not as large as it once was

* Investment has begun to suffer

Furthermore, productivity is lower within the country, and Israel are experiencing a bumpy transition from the manufacturing sector, to services.

However, other economists argue that Israel is still looking good. 40% dependent on exports, Israel, which relies largely on software and high-tech goods, still looks reasonably solid in comparison to a large portion of the West, and most of Europe. However, like most developed economies around the world, it is steadily beginning to focus more on services, which means that growth will begin depend on trading partners investing in high-value services.

As the largest trading partners, the recession weary United States and socialist Europe, continue to struggle, Israel may have to work much harder to grow its exports, and if consumers, concerned and weary with the war, continue to tire of the high cost of living, the days of Israel experiencing anywhere up to 5% growth may be long gone. But it has a long way to go before it becomes a derelict and pitiful Spain, LA, Illinois, Greece, and so on.

America should be protecting and helping the only democracy in the Middle East.