In the final three months of 2012, the pace (of economic growth in Israel) was its slowest in three-and-a-half years, growing at a 2.5% annualized rate, compared with 2.8% in the third quarter……. A year ago, gross domestic product was expanding at a 3.5% rate.

Not very optimistic reporting. Add to that the perspective of the Governor of the Bank of Israel and notable international economist, Professor Stanley Fischer, who observed that the country’s performance is going to be hindered by faltering economic performances in Europe and in the USA. Then yesterday, China announced a budget that restricted annual growth to a relatively low figure of 7%.

What hope for Israel in 2013, an economy that looks to exports? Well, actually, quite a bit.

To start with, Fischer recognises that “we expect 3.8% growth in 2013 and an important part of this includes the start of natural gas production, which will start flowing from the Tamar drilling and that will add 1% to the GDP in 2013.” Then compare that stat of 3.8% to many other countries within the OECD and you will see how Israel is not doing too badly.

Other recent macro economic data is encouraging. After a clear dip for much of 2012, new housing starts are at a ten year high. And January 2013 saw a slightly unexpected drop in unemployment to 6.5%.

For me, the immediate black spot is the cabinet itself and the lack of central direction. The country has been in ‘election mode” since the late summer, at least six months. This runs through from the period of ‘will there be an election?’ to the current maze of misinformation regarding the formation of a new government coalition.

When I ask ministry officials when resources will be released to new projects, they refer me to the newspapers and the talks between the various political parties. One headline from today’s press implies that the Prime Minister will try to create a new budget within 10 days. Not exactly a professional approach. In parallel, the PM has evidently told his two new coalition partners that they can choose between them who will have the Finance portfolio and who will fill it. A bewildering abdication of responsibility.

None of this pathetic nonsense detracts from the basic stability of the Israeli economy nor the dynamism of innovation that underpins it. However, let’s be honest. I bet Fischer did not factor these local instabilities in to his predictions for 2013. They will impact negatively in the short term.