The recent news emerging from the Israeli economy is quite mixed.

Superficially, all seems well. Fitch has affirmed Israel’s grade A credit rating, mainly as a result of the strong fiscal picture and excellent tax collection performance. On the high-tech front, overseas investors are very prominent. For example, HP is launching a new group to seek relevant start-ups for partnerships. Part of that focus will include the Holy Land. Similarly, the CEO of Oracle, Safra Katz, has publicly announced that her company will be seeking more Israeli acquisitions.

Very promising. However, there is a very gloomy side to the picture. It is dangerous to rely on one-off stats, although the 22% drop in exports for the first four months of the year is a major concern. What worries me more is the way politicians are driving the economy without due notice of the warnings of others.

The most prominent issue is the bizarre desire of the Prime Minister, Benjamin Netanyahu, to secure a budget for a 24 month period. For the record, there is a barely another country in the world that does not keep to a 12 month planning period. In fact that rule generally applies to commercial companies as well.

The world economy is considered unstable. Thus, long term planning is problematic. On a micro level, Israel is constantly embroiled in military fights with neighbours – another reason why accurate forecasting can be erratic. In fact, other than allowing for an strengthened government coalition, there is no obvious need for a two year budget. This seems to be a policy which has been created to bolster short term political interests rather than the future growth of the economy.

And what have a nasty smell to it are the continuing and developing strengths of vested interest groups. The national lottery – Mifal Hapayis – has seen a near doubling in contributions from the public over the past year. However, handouts have remained at a similar level, while salaries have left up. Additionally, more and more Israeli names are coming to the fore in the Panama papers, which somewhat explains why the middle class is forced to pay more and more taxes. And those government ministers with the ear of the Prime Minister seem to be ending up with sweeping 1984-type powers of the directive. Nothing illegal, but you have to look hard to find ‘good governance’.

Yes, the Israeli economy is steady. My business mentoring clients with retail outlets feel that sales are on the up. And yet, underneath something smells wrong. The signs are worrying to say the least.