UBS analysts are recommending Israel as a defensive play during the financial uncertainty…..(They) noted that the Israeli economy grew by close to 3% in 2014, the unemployment rate was under 6%, the budget deficit stood at 2.8%, and a current account surplus of 3.7%.

Sounds fairly encouraging, especially in a week when world stock markets stuttered in the face of the farcical Chinese economic crisis. (Farce – because this has been a disaster in the making for years).

However, there is another side to the economy, which is very worrying. Growth in Israel for the past two decades has been highly dependent on the entrepreneurial and innovative skills of the hightech sector. In contrast, the politicians and bureaucrats running the macro economy seem to be in a state of paralysis.

Item one: Growth for the second quarter of 2015 recorded of minute improvement of 0.3%.  This factors in a 3.8% drop in investments in fixed assets and a 12.5% decline in exports of goods and services. As Israel’s own Finance Minister described matters, this is a weaker performance than in Greece and in Spain. Ouch!

Item two:  A report on sales at large retail chains reveal a 2% drop in purchases for the early summer months. This fall off was particularly marked in the large supermarkets, where the figure reached 4.2%. Consumers are concerned.

Times are definitely not easy. I am sure that the rising power of international purchases via the internet only compounds the problem. When I talk to my business mentoring clients in the Jerusalem retail market, they are constantly being forced to come with new ideas to survive.

What worries me most is that Israel’s new government seems to be dallying around. The headline in Hebrew this week from the financial daily “Calcalist” referred to ‘100 days in office and all the ideas for reforms have gone to waste’. Even the Wall Street Journal commented that Israel’s wealth in gas has become a story of ‘political feuding, bureaucracy and delayed development.’ Sad, as the treasury simply misses some extra dosh.

At home, Israel’s Prime Minister is known for delaying new policies, especially when he may not be seen to be receiving the credit for them. That means financial and structural changes – the housing market, allowing freer imports of vegetables, changes to the defense budget, etc – these and more are likely to be put off. And who loses out? 8 million citizens of Israel.

Bottom line: Yes, Israel has some impressive macro stats to show off to the world. It is a wonderful place to live in. It is a shame that the politicos have agendas that do not allow the country to become an even better place for its citizens.