Discovering the strength of Israel’s economy
Historically, this is the quiet season for Israel’s economy, as the country is in the midst of a three-week season of festivals, eating and time off work. Trying to fix a meeting during this period is near impossible. And yet, the spread of positive economic news from the Holy Land continues to be wide and encouraging.
What follows are five tasters, representing the various key strengths of the Israeli economy.
At a macro level, cash flow is far better than planned.
The tax collection surplus (in September 2017) pushed the budget deficit for the past 12 months down to just 1.9% of GDP. Expenditure by the government’s civilian ministries has risen by 8.6% since the start of the year, compared with a planned rise of 8.9% and defense expenditure rose by 6.4%.
Much of the additional revenue has come about as a result of taxation of large profits or high-tech exits.
And whilst regular readers will know of my criticisms of the Israeli government for failing to tackle structural issues, on one subject I must applaud.
There are currently around 270,000 skilled people employed in the high-tech sector, say around 8.3% of salaried employees in a country of just over 8 million people. The Innovation Authority has just published a working paper to double that number within a decade. This will help to service amongst others the 307 r&d centres of overseas conglomerates, and thus encourage others to join them.
Moving on, Forescout intends to raise US$100 million on NASDAQ, presenting a company valuation of around US$1.5 billion. This is yet another example of Israel’s strength in the financial and cyber security commercial space. It is interesting to note that J.P. Morgan are to underwrite the offering, considering that the bank’s chairman recently visited the country, openly seeking new opportunities.
On a totally different level, I noticed that Global Village, the new VC fund of Zuckerberg, Bezos, Magic Johnson, et al, will also look to pick out Israeli start ups. The aim of the fund is to provide a link between key entrepreneurs across the globe. Israel will now be an official part of that eco-system.
And finally, my reading drew me to the attention of MySize, traded on both NASDAQ and the Tel Aviv stock exchanges. The company was originally founded by Dr. Erez Morag. When he was at Nike, he worked with some of the world’s leading sportspersons, including Roger Federer (tennis) and the Brazilian footballer, Ronaldo, ensuring that the equipment was fine-tuned to the last gram, literally. Morag’s company offers the consumer an opportunity to measure themselves or other elements to ensure that shopping is a much more accurate and thus more successful task.
Individually, these anecdotal highlights are fascinating at best. As a collective, they present the true vibrancy of the economy in Israel. Those who miss it or boycott it or turn their back on it, do so at their peril.