Israel’s strong economy – the UK connection
According to the Bank of Israel, the outlook for the economy in the Holy Land remains very positive.
GDP is expected to grow by 3.4 percent in 2018 and by 3.5 percent in 2019. Inflation is expected to converge to within the target range during 2018 and reach 1.1 percent at the end of the year. The Bank of Israel interest rate is expected to remain at its current level until the third quarter of 2018, and rise in the fourth quarter.
While much is told about the impact of the start up economy for the past three decades, I would like to focus on one area where for years Israel has not featured so well, but times are a changing. And that is the area of international trade.
Historically, Israel has run a balance of payments deficit. In recent times, the figures have become more even. In 2017, for the first time, Israel’s exports topped the US$100 billion, a 5% growth in dollar terms over twelve months.
One continuous part of this change around has been the trading relationship with the UK. Combining both exports and imports, this was valued at almost US$8 billion in 2016.
Recent news explains why there is such a strong commercial bond, which is not just based around the dramas of the Brexit debate.
First, as was mentioned this week in the House of Commons:
The British Government helped to establish the UK-Israel Tech Hub, a non-profit organisation based in Tel Aviv and London, to help British companies looking for cutting-edge innovation or Israeli start-ups seeking to grow through the UK. Over the last 5 years the Tech Hub has generated deals worth £62 million.
Second, as reported by Reuters, the British embassy in Tel Aviv “launched a programme designed to help incorporate Israeli digital health technology into the UK and its National Health Service”. Three times a year, IBM’s Alpha Zone accelerator program and DigitalHealth, London will seek to seek out and mentor those Israeli companies, which can best service the HNS.
Barry Grossman, the British embassy’s Director of International Trade in Tel Aviv recently observed that “in the year following the referendum, Israeli financial institutions invested over £150 million in the UK”. Evidently, this bilateral partnership has much more to offer both countries.