Figures released yesterday indicate that Israel’s economy will grow by 4.5% in 2008 (5.4% in 2007). And despite the “r” word – recession – increasingly mentioned by international figures, Israel is not showing signs of dipping into negative growth for 2009.

Israel has its forecasters of doom. And Israel’s 30% growth over 6 or so years has been linked in many ways to inward foreign investment and exports, which will both slow in 2009.

For the moment, there is much anecdotal evidence that the crunch has yet to come. A venture capital fund, Genesis, has raised US$100m for a new round of investment. I am aware of at least 2 Israeli start ups that intend to secure external investment in the next few weeks, and I hope to report on those stories in due course.

4 major employers, including Coca Cola (Israel) and Osem, have announced publicly that they have no plans for lay offs.

I am personally involved in an exciting new conference, aimed to introduce key Israeli figures in export sales, marcom and biz dev to new elements in marketing techniques. Delegates from some of Israel’s key high tech giants, including Sandisk, Comverse and ECTel, will be present at this central business event in Jerusalem.

Slow down or recession, the best way to tackle them is to generate new activity. That is what citizens are acting on. It is time for the government to follow.

Take a world credit crunch. Add in the local holiday season. Mix in a relatively high rate of interest. And what would you expect the Tel Aviv stock market to move?

Well, you are unlikely to expect it to jump 5%, which is exactly what it did today, Sunday.

The reasons are not clear. it has emerged that the pension funds are actively buying. And again, I stress that the fundamentals of the economy are sound – eg, unemployment has yet to rise. There is a tourist boom, which is likely to continue into 2009.

I have spent the past few days in shopping malls with my kids. Parking was a problem, as people flocked to empty their wallets in the shops. Yesterday, we went touring in the lower Galilee region, visiting a herbs and spices centre. We left at nightfall and the crowds were still flocking in.

Yes, the government has revised downwards its growth forecast for 2009. And “Israel is likely to face a credit crunch in 2009,” a senior regulator predicts, as reported in Globes newspaper.

The truth is that so far Israel is coping well. The authorities have reacted calmly and solidly. The internal economy is operating solidly. The country is prepared to face any winter storms, even if they are not just full of pretty white snows.

Yesterday, I wrote that the Israeli economy is essentially sound, relatively well placed to face the international credit crunch.

Sure enough, the Tel Aviv stock market did plung 8% on opening. By the end of trading, it had lost “only” 3.8%. During the day, a statement from the Ministry of Finance gave official government backing to private deposits in the local banks.

Few have considered how this international mayhem will effect the Palestinian – Israel peace process. One immediate thought is that if governments are having to spend more on domestic needs, there will be fewer spare resources for overseas aid – ie, less for the Palestinians.

Bad thing? Possibly. This may provoke a turn to more senseless violence. Alternatively, the Palestinians and Fatah may finally understand that the pot is not bottomless. The billions of annual support from UNRWA, the EU and elsewhere require fuller accountability, both towards their own and for the overseas community.

Last week, I wrote that the Israeli economy was different from many of its neighbours in Europe and North America. And the Tel Aviv stock exchange has been fortunate to have missed many of the massive swings recently due to national holidays.

No doubt that today, Sunday, will be “catch up time”. The market will suffer heavily. However, Sever Plotsker, a leading financial commentator, has noted 8 points why the local commercial system bears reason for cautious optimism. Writing in Hebrew in the paper Yediot Ahronot, he observes that: –

  1. Israel has not seen inflationary real estate prices.
  2. The mortgage market has remained manageable.
  3. Bank debt remains reasonable.
  4. Relative to other countries, Israelis save their extra earnings.
  5. The Israel stock exchange is less sophisticated than many of its rivals, lacking manipulative techniques that exist elsewhere.
  6. Due to government restrictions, Israeli banks since 2003 have (reluctantly) allowed for relatively high rates of bad debts.
  7. The budget remains balanced.
  8. Israel has experience in nationalising banks, and getting out quickly.

Plotsker does recall that Israel’s stock exchange has seen fantastic growth over the past 6 years – 270% at its peak – and so a correction will not be a bad thing in the short run.

Overall, a sensible, planned central approach, led by Stanley Fisher, should see Israel through the world crisis. Another tense week ahead for all, but we can remain hopeful.

Two months ago, I heard a lecture by Stanley Fisher, Governor of the Bank of Israel and who possesses a very impressive cv in nternational banking. He pointed out that over 5 years the Israeli economy had grown around 30%, despite wars and diplomatic concerns. unemployment was at a historical low. Debt was closing on European levels, and so the list went on.

Fisher was later asked how the coming world recession would impinge on Israel. For sure, the economy which has thrived due to direct foreign investment will suffer. Exports will take a knock. But from there on, providing government and individual keeps cool, it will not be too bad.

Right or wrong?

It’s Wednesday 8th October. As I write, Gordon Brown is about to announce a partial nationalisation of British banks. Yesterday, Wall Street dropped another 5%. Stock markets in Egypt and in Saudi Arabia fell 16% and 8% respectively.

As for the Israeli market, a 3.9% bounce upwards. Yup, the country that has learnt to thrive without a peaceful background bucked logic once again.

And yet the resons are clear. Sure, a 0.5% surprise reduction in interest rates helped. The fundamentals are good. The country does not possess a mortgage system as in America. The banks were revamped decades ago, with few serious exposures to the mayhem overseas. The stock market was upgraded this year on the FT index.

It will be a brave person to predict what will happen tomorrow, but the signs are positive for the long term.

Meanwhile, back in England, it is almost a hundred years ago to the day when Mary Poppins landed and her scriptwriters threatened government ownership of the banks. A spoonful of sugar for all international investors?

I was told of a group of Israelis, who underwent a psychometric test for junior management positions in the local civil service. They were examined on their Hebrew, given an assignemnt in time management, asked to identify the wrong picture in a sequence, and more.

At the end, one of the participants asked if the senior managers had undertaken such a test. Others laughed, but there was clearly more than a tinge of poignancy in the question.

Personally, I don’t see why drawing a tree with roots or a family with people of correct proportionate sizes means that you are capable to carry out satisfactorily an administrative task. But the whole exercise got me thinking.

Let’s take all these high flying bank execs and sales people around the word. Many have been earning fat bonuses for years on what have proved to be financially unsecure policies. They frequently obtained their position by going to the right school, knowing the correct person, or just through the gift of the gab.

Perhaps a better way to assess human potential is to make them draw pictures and analyse simplified test scenarios. It might save the world from a world recession.

Lehman Brothers has disappeared. Halifax in the UK was sold overnight. And in Israel?

The shops are full, as people prepare for the Jewish New Year or the end of Ramadan. Banks are still rolling in the profits. Unemployment is at a record low.

And high tech? Well I can report form own perspective. I have one client, where contracts are being drawn up re a UK investor. Another has received 2 proposals from mainland Europe.

These are not freak incidences. A colleagues told me today that an investor, who last week informed him that a project looked interesting, is about to pop over to Israel to complete the deal. And so it goes on.

I find 2 lessons here:

a) The collapse on Wall Street and elsewhere was sparked by stupidities in the mortgage market in one country (and rising commodity prices). That does not mean all global economies are rotten.

b) The Israeli market has undergone some harsh restructuring since the previous high tech dive in  1999. It will not escape unscathed. However, it still has what to offer the outside world, especially in investment opportunities. Time for a visit.

A few weeks ago, I attended a panel discussion on the cleantech industry in Israel. Fascinating stuff. For example, it turns out that this tiny mass in the Middle East leads the world in solar tech. 

And that is not all. We grow algae in the dessert and send the production abroad. Shai Agassi’s non-fossel powered car is developed in Israel. Irrigaion techniques have moved far forward form computer linked sprinklers.

I was recently commissioned to investigate some greentech opportunities for a UK based investment group. I thought that I had seen eveything, but there was more to come.

I have met a company generating commercial power for communities out of manure and sewage. Another corporation is creating cooling systems out of crystals. And a third group has designed a housing complex where the power used is self-generated amongst the dwelling units.

These companies are earnestly seeking sales streams abroad, and they deserve all the success they can receive.

For the past year, I have been a member of the board the Israel-Britain Chamber of Commerce. The organisation was recently involved in coordinating the visit of the British Minister of Trade, Lord Digby Jones.

Now get hold of this:  “Over the past decade, bilateral trade has grown by 40 per cent and is now worth over £2.3 billion pounds. …..  more than 250 Israeli companies now located in the UK…. and 47 Israeli companies listed on London stock exchanges, with 41 having joined in the last three years.”
  
Lord Jones said his government organisation UK Trade & Investment, which is responsible for promoting the UK international business, is committed to securing another 25 more inward investment projects from Israel by 2010.
 

What an opportunity for Israeli companies. The Brits are actually giving a direct entry int the vast network of European trading relationships. Just hop on board.


The fallout of the mortgage crisis in America and the rise in commodity prices have begun to affect the Israeli economy, but to waht extent?

For the past 5 – 6 years, the stats show an economy that has grown by over 30%. No wonder the OECD wants Israel as a member. As for 2008, only last week, unemployment fell to another low of 5.9%. Time lag until it rises back up? Maybe, but all the predictions still say growth this year will round off at about 4%.

Now compare that to other countries.

Evidently, there are some underlying strengths within the Israeli financial scene that over weigh short term international economic changes. I was talking last week to a senior planner in the Ministry of Trade. Currently, the forecast for 2009 is growth around the 3.5% mark, well beyond almost all of Israel’s competitors.

I have spent 3 days, introducing a group of savvy German investment officers to the wonders of Israel. These guys travel extensively. They were supported to 2 class-acts of IT experts. And yet……

First, they were introduced to the wonders of the Investment Promotion Authority. It would be unwise to dismiss this team as just another set of boring civil servants. In a dry but professional manner, they made the point that Israel, specifically Jerusalem, has much to offer a new r&d centre. Consider Intel with its massive plant in the north of the city – they American giant has already sank US$5.75 billion int Israel.

Then we met with the biz dev group of Ernst & Young in Israel. They linked us up with a series of private seed investors. The range was clearly beyond anything known or anticipated by our visitors.

Next steps? The Germans had wanted to take the development process over to Europe. They now realise that this would force them to abandon the commercial and techniocal expertise available in the Holy land.

I was recently chatting to a business coach in Israel. I was surprised to see that when it came to time management, most of his clients are senior managers, even CEOs.

 

We are talking about people with experience, at the peak of their careers .  Either they have set up the company or they have risen through the ranks, ending up at the top of the tree. So you would expect them to be able to manage their time and know how to run a company efficiently.

 

Ask yourself candidly: Are you really in control of your time? In the average day, how many hours are you forced to allocate to putting out fires rather than creating new opportunities. What proportion of time is given over to matching the demands of the CEO, so that we forget why we came to work?

 

Here are three simple tips, which will are designed to improve your use of time.

1)      Don’t spend the first few minutes of the day checking your diary, sorting out what you need to do. Empirically this is considered the most productive part of many people’s day. That task should have been completed at the end of the previous day.

2)      When you allocate tasks for specific days, assign them a period of time, just as if they are an appointment. This allows you to visualise clearly exactly how much time you have for other tasks and so called emergencies.

3)      Think in advance who is going to demand something from you and preempt the issue.

 

And here’s the catch, as the coach commented back to me. Most of us know about these tips. What we refuse to recognize is that we do not act on them. And what many are afraid to ask is “why” – what’s stopping us carrying out the obvious.

 

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