Israel’s economy has just turned in its 6th successive quarter of growth. While slightly down from earlier stats, the Finance Ministry is looking towards achieving 4% for the year, with a similar target set for 2011.

So the comments of OECD Secretary General, Angel Gurria, will come of no surprise. During his visit to Jerusalem, the international financier noted that Israel’s economy is doing better than others. Earlier Gurria had observed that:

The Israeli economy had grown during a recession, and OECD countries can learn from that. Unemployment is also low than the group’s average.

A compliment indeed, and very encouraging. Gurria did not hide his concerns for the future. He feels that more can be done financially to help the Palestinians. And the minority and poorer sectors must not be ignored.

However, Israel’s economy still faces three key challenges. Fortunately, none are concerned directly with budget deficits.

• It is faced by a continuing rise in the price of real estate, a rare issue for the rest of the OECD. The government is taking too long to release new land on to the market.
• The shekel continues to remain strong despite the open and continuing efforts of the Bank of Israel to buy dollars. This is damaging the profitability of exports, a key part of the country’s economic success.
• And major overseas markets are cramping up, forcing exporters to look for alternatives. Not so easy after a global recession.

Where to next? As the OECD struggles with the Irish crisis, Israel is already looking beyond to a different set of hazards.