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Tag: Economy

Yeshiva Scandal Will Work In Favor Of Yeshiva Bachors

According to a recent report from the Ministry of Education, a state-funded yeshiva recorded nearly 10,000 “ghost workers” on whose behalf the yeshivas received scholarships. According to Treasury estimates, the damage came to something like 55 million shekels a year.

According to reports from Israel’s economic media, this amount will not be returned to the budget of the Ministry of Education, and will actually remain in the yeshiva.

The Ministry of Finance and the Knesset approved a financial decision that the yeshivas obtained funds fraudulently, but the funds nevertheless, will be used to increase the benefits of the students who do learn in these institutions. The Stipend for each student will grow at 60 shekels a month to 515 shekels a month.

The Palestinian Authority: How It Looks From Here

Perhaps it is time for the Palestinian Authority to call off suicide picketing and get to work on life in their own borders. They will find this is the root to independence!

Swift economic growth in the West Bank is not enough to keep up with population growth, says a new UNRWA report. The jobless rate rose in the second half of 2010 to 25% of the region’s workforce from 21.7% in the first of the year and 23.6% in the second half of 2009. Unemployment increased even as the gross domestic product rose 7.6% last year.

Salem Ajluni, a UNRWA economic consultant said:

“There is fairly robust population growth and fairly robust labor force growth, so you need a pretty rapid rate of job creation to absorb it…You need tens of thousands new jobs each year sustainably just to maintain unemployment rates at existing levels.”

UNWRA figures however show that the number of jobs in the West Bank increased over 14,000 in 2010, or 2.6%, while, the number of people in the labor force, which the agency defines broadly to include people employed, actively looking for work as well as those who have given up, rose 4.6%.

However, the Palestinian Authority’s calculations are different.

They put the rate at 17% and say the jobless rate has been falling.

In the Gaza strip, an easing of Israel’s and Egypt’s blockade has had positive fiscal affects and foreign assistance to the West Bank, threatened by the Hamas-Fatah merger, has actually spurred a consumer and building spike.

After the threat to the PA’s foreign aid, which does make up the majority of its cash assets, it is vital to realize how the building of Jewish settlements will only increase Palestinian employment in the West Bank.

As it stands, employment in the public sector, which has been the direct beneficiary of foreign financial aid, grew by 3.6% in the second half of 2010. And in the private sector, the number of jobs declined by 1.7% while employment in Israel and in Israeli communities located in the West Bank it fell 3.6%.

Also, to further put life into the economy, all boycotts on Israeli trade must be called off.

Hey, a little self-reliance never hurt!

Mazal Tov Israel

On Thursday, the Bank of Israel increased its 2011 GDP growth forecast to 5.2 percent from 4.5 percent and lowered its unemployment rate forecast to 5.8 percent – lowest ever

The Bank of Israel’s growth forecast is in fact lower than the OECD forecast – 5.4 percent – announced earlier in the week. They are also predicting 4.2 percent GDP growth in the coming year and no change in the impressive unemployment rate.

The bank issued a statement saying:

“The rapid growth of GDP and use of resources in the first quarter, and in particular the surge in exports and fixed investment, resulted in an upward revision of most items. Despite the rapid increase in exports, the surplus in the current account of the balance of payments is expected to be significantly smaller than in the previous forecast, because of a faster increase in imports and a more severe deterioration in the terms of trade. The quarterly rates of growth are expected to slow a little in the course of the year as the economy converges to a full employment situation.”

And as for 2012:

“Exports are expected to continue increasing, at a rate slightly below that of world trade, due to both external forces – the deterioration in the terms of trade – and the level of the real exchange rate. The steep increase in capital stock, the result of the expansion of investment in 2011; and the continued rise in the rate of participation in the labor force to 58%, are expected to contribute to a growth rate in 2012 in excess of the potential rate, despite the fact that the economy is in a full employment environment.”

The prediction is 4 percent growth in private consumption for both this year and next; export growth (excluding diamonds) of 6.3 percent this year and 6.2 percent in 2012, import growth (not including defense and diamonds) of 11.5 percent and 6.7 percent respectively, and investment in fixed assets growth of 15.4 percent and 6.8 percent.

The forecast is evidence of stability in Israel’s geopolitical situation and continued smooth riding – knock on wood – in the global economy with no serious fiscal crises developing.

Meanwhile, in IMD’s World Competitiveness Yearbook (WCY) in 2011, Israel is number one in the world in total expenditures of R&D as percentage of GDP, central bank policy, entrepreneurship and scientific research. Also, in 2011 Israel was ranked by IMD, the second in the world in access to venture capital and public expenditure for education.

Israel to Join the Organization for Economic Development

Mazal Tov to Israel. A vote on Monday by the Organization for Economic Development and Cooperation (OECD) accepted the Jewish Country onto its roster, alongside Slovenia and Estonia, making the total count of countries, 34.

Said our fearless finance minister Yuval Steinitz, who will receive an official invitation in Paris at the end of the month from the OECD’s finance ministers:

“The significance of this is huge and that is why, as a matter of fact, I decided to treat it as a top priority 10 months ago and enter into a special program to introduce Israel into the organization at a peak time… It is the most respectable international club a small state like Israel can be accepted into…From what we know about other states, in the years following the acceptance there is a rise of billions of dollars in foreign investments in the state accepted…There is also a political gain here. We are receiving a stamp of approval… that Israel belongs to the world’s most advanced and developed countries, and not just financially – in civil rights, a clean and independent court system, regulations, equality, and steps to eliminate discrimination.”

Manufacturers Association President Shraga Brosh said:

“Israel’s membership with the organization constitutes a label of quality.”

Treasury chief Haim Shani had this to say:

“The joining of Israel to the organization points to the trust companies have in Israel’s economy and solidity. I believe the new membership will help Israel’s society and economy progress, attract foreign investors, and develop the market.”

OECD Secretary-General Angel Gurría put it like this:

“Estonia, Israel and Slovenia, along with Chile that has just deposited its instrument to become a full member, will contribute to a more plural and open OECD that is playing an increasingly important role in the global economic architecture…This new chapter in the history of the Organisation confirms our global vocation as the group of countries that search for answers to the global challenges, and establish standards in many policy fields such as environment, trade, innovation or social issues.”

Levant Basin Province Has Gas

According to the humble estimate of a US energy industry expert, international companies might soon join exploration efforts for oil and gas in the Holy Land.
Fred Zeidman told Globes website:

“It is quite likely that international firms will join the exploration efforts on Israeli territory; this comes one year after the ‘Tamar’ and ‘Dalit’ discoveries in the Mediterranean Sea. One international firm has already embarked on the could-be gold rush: Noble Energy, which was the partner of Delek and Isramco in their respective discoveries”.

Two of Israel’s largest financial groups: Nochi Dankner‘s IDB group and Ofer Nimrodi’s Israel Land Development too have entered the sector already.

Zeidman said:

“It happens all the time…We see in the US that the moment a company discovers oil or gas that can be transported, there’s a crazy rush to the region by other companies, and that’s a function of the size of the reserves found. Around the world, as soon as Noble goes to a place, many other companies follow in its wake. The prospects here are amazing, and I have no doubt that we’ll see an economic boom, and a rush of more companies to Israel from overseas following Noble.”

Levant Basin Province

A report done by the U.S. Geological Survey estimates that 122 trillion cubic feet of recoverable natural gas are in the Levant Basin Province in the eastern region of the Mediterranean.

This area includes the coastal areas near Israel, Lebanon and Syria.

Brenda Pierce, a USGS Energy Resources Program Coordinator said:

“The Levant Basin Province is comparable to some of the other large provinces around the world…Its gas resources are bigger than anything we have assessed in the United States.”

The Levant Basin Province holds an estimated 1.7 billion barrels of undiscovered oil, which can be easily recovered with existing technology. This marks the first time the USGS has assessed the Levant Basin area for extractable resources.

Good Days Ahead

Israel 1948
Another milestone en route to turning into a highly developed economy, Israel’s per capita GDP will reach $30,000 this summer and the overall gross domestic product will reach $230 billion.
In the first half of the decade The Jewish Country fully reached the $20,000 per capita GDP mark. It happened slowly and reticently; the recession of the second Intifada curbed economic growth and pushed the economy backwards.

Reaching the $30,000 per capita GDP mark partially reflects the increase in real national income in shekels, and the shekel’s strengthening against the dollar.

The state of the Israeli economy at this juncture is exceptionally good. Other economies whose per capita GDP is similar to ours – Spain, Greece, Portugal, and Britain – sustained harsh blows during the financial crisis. Their focus in the coming years will be on licking their wounds and attempting to extract themselves from the abyss of debt and deficit. Their recovery promises to be slow.

In six of the seven leading industrial powers, the ratio between government debt and GDP will grow by dozens of percentage points in the next few years. The debt will reach 90% of the GDP in Germany, 96% in France, 100% in Britain, 110% in the US, 130% in Italy, and 250% in Japan. In Spain, Greece, Portugal, and Ireland, the ratio will stabilize somewhere between the 100% to 150% mark.

Yet in Israel, the opposite should happen: debt will go down to only 70% of GDP. Israel’s banking system managed to overcome the past two years without taking a penny from the government.
Prime Minister Benjamin Netanyahu presented an ambitious goal for Israel: Joining the list of top 10 or 12 richest economies in the world. Based on today’s perspective, this target appears to be realistic. In order to make it happen, Israel needs to reach the $40,000 per capita GDP mark. To that end, the economy must grow at an annual rate of 6.5% in the next six to seven years, assuming that the shekel exchange rate won’t change much from its current level of about NIS 3.6 per dollar, and that the population will grow by 1.8% annually.

In the years 2003-2008, the economy in the Jewish Country grew at an average annual rate of 5.5%, and with a less convenient starting point and two wars in the middle.

The accelerated growth to happen in the coming years can be premised on the following: Tens of thousands of ultra-Orthodox men joining the workforce, boosting the production of Israeli Arabs, improving the quality of education and employment, massive investments in educational and physical infrastructure, expanding the export base and directing it to new markets, slowing down the growth of the defense budget, and removing bureaucratic obstacles.

The kibbutzim reinvented themselves and have again turned into an economic asset and a stalwart growth accelerator; the discovery of natural gas by businessman Yitzhak Tshuva frees Israel of the dependency on coal and dramatically brings down the cost of electricity production; the Arab sector is witnessing an unprecedented entrepreneurial business revolution, and Israeli software companies are taking over Africa.

Israel’s economic rather than military wings are spread and flying independently.

Israeli Economy Continues to Recover

The economy in Israel grew at an annualized 4.4% in the fourth quarter of 2009. This is its strongest spurt in nearly two years, while the nation continues its recovery, quickly, from a short downturn.

The Central Bureau of Statistics on Tuesday also left unchanged the third-quarter growth, which was of 3.0% and the full year 2009 estimate that the economy grew 0.5% to NIS 763 billion which is $203 billion.

The economic forecast for 2010 is that we will witness roughly 3.5% growth.

The growth which we saw in the fourth quarter was the highest since the first quarter of 2008, when the economy grew 5.5%.

After contracting an annualized 3.1% in the first quarter on the dawn of the global crisis, Israel’s economy grew 1.2% in the second quarter and 3% in the third quarter.

Also, the per-capita gross domestic product grew 2.4% in the fourth quarter.

The growth in the final three months of last year was fuelled by a 33% surge in exports and a 4.4% rise in consumer spending, the bureau said in its first estimate of fourth-quarter GDP growth.

In addition to this, imports rose 13.8% while investment in fixed assets fell 9.4%.

Tough To Kill: Israel’s Economy and the Global Economic Collapse

“When it comes to U.S. military résumés, Silicon Valley is illiterate. It’s a shame. What a waste of the kick-ass leadership talent coming out of Iraq and Afghanistan.”

JON MEDVED

AzrieliAlthough it goes humbly un-boasted – perhaps due to antisemitism and worldwide Zionist bashing – Israel has managed to thrive during the recent global economic crisis. Actually Israel’s economy “has the highest concentration of innovation and entrepreneurial ism in the world today”.

What is at the root of Israel’s steadfast success? Is it because a country of G-D’s Chosen people in their homeland is bound to kick ass? Is it the subtle socialist shadows, inspired by the likes of Theodore Herzl, which are still sort of cast over a competitive and modern national work ethic, which encourages capitalism?

These factors may play a role, but upon recent analysis done and expert consensus, the main factor seems to be its very unique government policies having to do with immigration, disproportionate research and development spending and last but not least its universal military training and national service program.

While teenagers in other countries, namely the United States are sweating over which college they can get accepted to, Israelis are racking their brains to be accepted to one of the country’s top military units. In fact, in Israeli culture, the most elite military units are the equivalent of the Ivy League, in the United States. In the Jewish country, which brigade and what duties an applicant was involved with in the army holds the most weight and is the most influential factor in a job interview.

An 18 year old British navy veteran named Gary Shainberg, who is now the vice president of technology and innovation for British Telecom said:

There is something about the DNA of Israeli innovation that is unexplainable. I think it comes down to maturity. That’s because nowhere else in the world where people work in a center of technology innovation do they also have to do national service.”

Ever since the State of Israel won its independence in 1948, the future of its existence has been in question. Such a threat has an amazing effect on an economy and gives individuals a psychological incentive to succeed. Life in Israel is fast-paced in every sector of secular culture; therefore ideas get drawn up faster and put into execution faster.

According to the Organization for Economic Cooperation and Development (OECD) 45% of Israelis have a university education, which is among the highest percentages of nations worldwide; this data goes without mentioning an even higher percentage of military experience among citizens, nearly unanimous, which also has a positive influence on the economy’s attitude.

According to a recent study in theIMD World Competitiveness Yearbook, Israel was ranked 2nd out of 60 developed nations on the criterion of whether “university education meets the needs of a competitive economy.”

To date, Israel’s economy has the highest concentration of innovation and entrepreneurial ism in the world. She is the world leader in the percentage of a nation’s economy which is spent on research and development, and the pay back is huge.
In 2008, when the recession was beginning, per capita venture investments in Israel were 2.5 times greater than in the U.S.

That’s more than 30 times greater than in all of Europe, and 80 times larger than in China; while 350 times bigger than in India.
Currently there are a total of 3,850 successful start-up companies in Israel. That’s one for every 1,844 Israelis. More Israeli companies trade on the NASDAQ than companies for all of Japan, Korea, China, India and Europe, put together!

Greenback bashed again as exchange slips below NIS 4

Shrinking Dollar
The U.S. Dollar, also known recently as “Obama Bucks” slipped below the NS 4 benchmark rate Friday for the first time in five months. The greenback’s international weakness, aggravated by the ongoing world recession and the immanent possible bankruptcy of giant U.S. automaker General Motors has resulted in the US currency falling against other major currencies, especially the Euro and Japanese Yen. The Shekel has continued to strengthen following the announcement by Bank of Israel Governor Stanley Fischer that the BoI will discontinue purchasing dollars as it has recently to help maintain it’s exchange rate and assist Israeli exports with a lower Shekel rate.

Fischer had tried to prop up the sagging greenback due to fears that Israeli exports would suffer, especially those destined for American markets. Another reason for the BoI purchasing dollars was due to an already large foreign currency reserve by the bank in that currency which would mean a loss of profits if the currency went down to the rate it was at it’s low point of NS 3.30 about a year ago. All this news is a bit discouraging for many people who are receiving pensions and other incomes in US dollars and have to exchange them for Shekels. Apartment sales to Americans also suffer when the dollar rate falls as prices for properties in Israel become more expensive.

For people who remember the early to mid 1980’s, when inflation in Israel reached nearly 400% and the former “old Shekel” was depreciating daily against the dollar and other currencies, this business seems almost comical – unless one is living on dollar based investments and pensions that is. A Citibank economist was recently quoted a saying “we think the Israeli central bank could soon find itself in a position where it is neither necessary nor desirable to continue it’s policy of purchasing foreign exchange (dollars) at the rate of $100 million a day”. That’s obviously what has happened in that the BoI is simply flooded with dollars.

In the long run, however, it’s obvious that the economy of Israel is tied considerably to what is happening in America; and too strong a Shekel rate is counter productive

for Israel’s exporters, especially in the current recessionary economy.

Bibi Sinks Deeper in The Mud

Binyamin NetanyahuThe rock group Depeche Mode has come and gone, and so has the Lag B’Omer wiener roast and marshmallow toast. But P.M. Bibi Netanyahu and his so-called Chancellor of the Exchequer, Yuval Steinitz, continue to sink in the financial quagmire, they seem to have created by trying to be clever with the Israeli public.

As their popularity reaches the point where they can both crawl under a snake’s belly, these two guys, especially the one supposedly in charge of the country’s purse, seem to find themselves literally pinned against the wall, from the side of public opinion.
To make matters even more pressing for Bibi and Co., the Finance Ministry’s budget planner, Ram Belinkov, announced his resignation today. Are the “rats” beginning to leave the sinking ship?

Meanwhile, talk of more firings from work places will mean even more people applying for unemployment benefits – if they are even entitled to receive them.

The more affluent people will have to pay more, and those earning NS 80,000 or more per month will have to pay a higher amount of National Insurance contribution. Purchasers of luxury cars, especially gasoline guzzling SUV’s, will have to pay higher purchase taxes. But these changes won’t affect the poorer classes, who will have to pay higher prices for fruits and veggies in open air markets, due to the government asking for VAT to be paid now on all fruit and vegetable purchases. VAT will be increased one percentage point to 16.5% which will apply to all purchases, from basic commodities to cars and new real estate sales.

How the new rate of VAT , and the requirement for it being paid for stuff bought in the shuk (open air market) is going over with the people manning the stalls there, a visit by a Channel 2 news reporter got it “straight from the horse’s mouth”. One vendor, who has had a stall in the Menahem Yehuda market in Jerusalem for years, summed it up this way: “I am a loyal Likud-nick – always have been. But if these changes go into affect, then all them (the Likud hierarchy) including Ruby Rivlin (the Knesset Speaker) are not welcome here”.

And we’re sure those shuk guys mean business!

OUCH! Bibi does it Again!

In what many people are considering to be a shocker, the Netanyahu government’s Finance Ministry announced their proposed economic plan on Thursday. The Finance Minister, Yuval Steinitz (or is it really Bibi with Steinitz only filling the position as a “stooge” for Netanyahu), presented the new budget, which includes some changes that are reminiscent of Netanyahu’s previous stint as finance minister during Ariel Sharon’s term in 2005. Some of the new budget changes include:

1. A sharp 10% reduction in child allowances with an aim to “equalize” the amount a family receives for each child from National Insurance. This will severely hurt religious families, and has enraged Shas Party members, who agreed to join the Netanyahu government in the first place when he agreed to their demands, including those involving child allowance.

2. Reducing the Defense Ministry’s budget by NS 2.5 million and forcing the IDF to raise its retirement age for career soldiers as well as the amount of pensions received (sorry guys and gals, no more “golden parachutes” at age 45).

3. More restrictions on persons filing for unemployment: persons up to age 35 will only receive benefits for 45 days; 35-45 for 60 days; and over 45 for 90 days. When asked what people will do with so few jobs available, the answer was: Well, there’s gas stations, supermarkets, and “yesh neshek?” (the “do you have a gun?” question security guards ask people going into shopping malls, etc.).

4. Benefits for pensions and disability payments will be “frozen” until the end of 2010 with no cost of living raises, etc.

5. And, something that everyone who has to spend time in a hospital will feel: 50 NIS ($12) daily surcharge for each day spent in hospital (people won’t be so keen to stay there long, especially elderly people on limited incomes). And this sum is in addition to all other “out of pocket” amounts due.

All of this couldn’t have come at a worst time for most people with more than a quarter million Israelis “officially” unemployed and everyone feeling the sharp sting of this current recession (especially Bank Hapoalim’s head Shari Arison, who in addition to all her other problems is now planning to divorce her current husband, Ofer Glazer – yeah, that guy who spent some time in jail for “bothering” a female employee on Arison’s yacht. Shari may have to sell that too, to raise some badly needed cash).

All in all, it doesn’t bode well for us simple folk who are just trying to keep from drowning in very deep financial waters.

Netanyahu, Obama, and Hillary

If nothing extraordinary occurs, 3 months from now Benyamin Netanyahu will be once again Prime Minister of Israel, while Barack Obama sits at the Oval Office in Washington, DC.

How will they communicate with each other? Netanyahu is a devoted Capitalist, who’s currently promising his constituency to be a strict hard-liners when it comes to security and foreign policy. On the other hand, Obama may be the most Socialist of all American presidents to date, and he’s the poster boy of “swapping conflicts with diplomatic efforts”. Tensions between the two men are almost certain.

Luckily, Hillary Clinton is also involved in this picture. And Netanyahu would have a much easier time in securing a common ground with the next Secretary of State.

This unique play of interests and personality is sure to make the next four years very interesting.

Israel’s economy refuses to be affected by Wall Street crisis

It’s been said to be the biggest economic crisis in America since 1929. So far we’ve seen the collapse of Lehman Brothers, Merrill Lynch, and AIG, and there’s no end in sight.

Obviously, the markets around the world reacted badly, with vast depreciation of rates, especially in Asia. Israel saw a poor day on Monday as well.

But today the Israeli stock exchange begins to recuperates and leaders in the financial system reassure the public and say that a very small percentage of their money was exposed to Lehman Brothers.

The Israeli media loves big headlines, but once those headlines are gone, life goes on as usual, and personally I didn’t happen to see people worried about this whole issue. Maybe it’s too soon. Maybe it will reach the Israeli economy. And maybe not.

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