Afternoon Tea in Jerusalem Blog

In addition to my work as a business coach, one of my interests is blogging about life in Israel. This is a country full of contrasts – over eight million citizens living in an area the size of Wales. You can see snow and the lowest place on the globe in the same day. Although surrounded by geopolitical extremes, Israel has achieved a decade of high economic growth. My work brings me in contact with an array of new companies, exciting technologies and dynamic characters. Sitting back with a relaxing cup of strong tea (with milk), you realise just how much there is to appreciate in the Holyland. Large or small operations, private sector or non profit, my clients provide experiences from which others can learn and benefit.

Israel’s economy continues to fizz along, consistently succeeding in defying the moaners and groaners. Last week, I reported how GDP growth for 2016 has come in at a very healthy 3.8%.

And while I have my gripes about how this new wealth is being spread – the gap between the haves and have nots remains excessive – there is much to welcome. So here are four pieces of news that are worth hearing about and allow you consider how others outside Israel can learn and / or benefit as well.

First, let me return to the macro statistics. For example, in the last quarter of 2016, imports dropped 6.7%, as exports gathered pace by 11.2%. And even though the minimum wage has continued to rise significantly as per a government agreement, unemployment has fallen for a fourth straight year and is now about 4.3%. Significantly, the country is seeing more females enter the workforce from the conservative sectors of the Arab communities and ultraorthodox Jewish domains.

What is encouraging is that these results have been achieved despite the continuing low level economic activity in Europe and in America, and despite the internal constraints posed by the defense establishment. It is also worth mentioning that one Israel’s largest exporters, Intel, witnessed sales to overseas drop off 24% due to structural changes.

Now let me turn to the housing market, where prices have risen and risen for years. The fear is of a housing bubble. If it is to burst, there will be a financial meltdown as happened in America.

The numbers from the real estate sector are contradictory. Yes, the quarterly survey from assessors shows an 8% leap in house prices. However, a survey by the Ministry of Finance has surmised a 1.2% drop. What is clear is that there has been a distinct slow down in the numbers of houses purchased overall, especially in the ‘hot opportunity’ areas such as Jerusalem. In other words, there are signs that maybe the market is finally sorting itself out.

Meanwhile, Israel continues to fulfill its title as the ‘start up nation’. For example, Apple returned for its fourth purchase, picking up Realface. The Israeli company has created a security package, based on facial recognition for mobiles. The previous three ventures were valued in total at about US$765 million, although this one is thought to be worth just a few million.

In a totally different sphere, the Israeli economy persists in showing off its openness and diversity.

A new startup accelerator has been launched in Haifa to assist Arab entrepreneurs. The programme targets startups that have completed Series A financing, already developed a prototype product and/or received funding from the government’s Israel Innovation Authority (formerly the Office of the Chief Scientist).

This effort matches a similar incubator in the Nazareth region. Here, a private cooperation initiative has brought together Jews and Arabs.

What would be super encouraging if the government could come up with a full strategic policy for the economy. Now that could make an enormous and long-term positive difference.

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