by Ambassador (ret.) Yoram Ettinger
1. According to the May 24, 2018 issue of the London Economist Intelligence Unit:”…
The country [Israel] has several key advantages, particularly its high level of skills and technology and its favorable demographic profile. This should ensure that the economy continues to expand more rapidly than that of most developed countries….
“Offshore hydrocarbon discoveries will boost the economy and external accounts over the long-term…. The Economist Intelligence Unit forecasts that the long-run trend rate of growth will average 3.5% a year in 2018-50 and 2.1% a year in per-capita terms, which should keep average incomes around those in wealthier developed countries….
“A $38,440 GDP [$40,140 at market exchange rate] in 2017, roughly on a par with South Korea and Italy…. [However, unlike all other developed countries], Israel does not have formal relations with most of the other countries in its region, limiting its ability to participate in regional trade or investment flows…. Israel has developed resilience to political uncertainty and security concerns, and has successfully forged markets further afield….
“The country has largely overcome relatively low rainfall owing to desalination and water recycling, and is now a major exporter of water technologies.
“Israel has invested heavily in education and technology and spends a higher proportion of its GDP on civilian research and development than any other country [in the world]. Moreover, Israel’s high spending on military research has had positive knock-on effects for the civilian technology sector. The local workforce is highly educated with more than 50% of the population enrolling in tertiary education….
“In contrast to many other developed economies, Israel’s labor force will continue growing over the long-term [due to high fertility rate and net-immigration]. The unemployment rate is low by historical standards, and the government is seeking to encourage greater labor force participation among previously excluded groups [e.g., a substantial expansion of ultra-orthodox workforce, including in high tech]. Population growth will remain faster than in most high-income countries….
“Israel will continue to develop trade ties with Japan and major emerging markets such as China and India and mid-size Asian economies. Israeli exports will continue to compete on quality and innovation rather than on price….
According to the London Economist Intelligence Unit, Israel’s population is projected to grow from 8.7MN in 2018 to 11MN in 2030 and 14MN in 2050;
GDP – from $350BN (2018) to $770BN (2030) and 2.3TN (2050);
GDP per head – from $40,140 (2018) to $71,710 (2030) and $167,310 (2050);
Export – from $101BN (2018) to $262BN (2030) and $924BN (2050);
Import – from $96BN (2018) to $192BN (2030) and $692BN (2050).
2. Israel’s defense industry exports surged, in 2017, to $9.2BN, a 40% increase (over 2016 - $6.5BN), mostly due to transactions concluded with India. The lead export items are missile defense, air defense, electronic warfare, avionic and other upgrades, ammunition, telecommunications, cyber technology, unmanned aerial vehicles, space satellites, etc.). The leading Israeli defense industry exporters are Israel Aircraft Industry (IAI), RAFAEL Advanced Defense Systems, Israel Military Industries (IMI) and Elbit International Defense Electronics (which is about to acquire IMI). Israel’s defense industries employ 150,000 persons. Asia absorbed most of Israel’s defense exports, followed by Europe (e.g., upgraded combat planes to Croatia) which accounts to over 20% (Globes, May 3, 2018).
3. The NY-based International Flavors & Fragrances – a global leader in the market of taste, scent and nutrition - acquired Israel’s Frutarom for $7.1BN in a cash and stock transaction. Frutarom is focused on natural products, selling 70,000 products to customers in over 150 countries (Globes Daily Business, May 8).
4. Intel – which has operated in Israel since 1974, employing 11,000 persons in Israel - will invest $5BN in the expansion of one of its production facilities in Israel, while completing a previous investment of $6BN in its production facilities, mostly in the research & development area. Intel’s exports out of Israel totaled $3.6BN in 2017 and $50BN during the last 45 years. In March, 2017, Intel acquired Israel’s Mobileye for $15.3BN (Globes, May 16).
5. Amazon has rented a 130,000 square feet facility in Israel for its research & development, electronic trade and logistic activities (Globes, May 16).
6. Japan’s TDK, a multinational electronics employing 103,000 persons throughout the globe, which produced $11.6BN in revenues in 2017, is setting a second research & development center in Israel, expanding its production line there. TDK negotiates with a number of Israeli startups to develop products, to be distributed globally by TDK. TDK’s first R & D center in Israel employs 260 persons. Recently, TDK invested millions of dollars in Israel’s StoreDot startup, specializing in high-speed charging of lithium batteries (Globes, May 28).
7. Japan’s Canon, a digital imaging giant, is buying Israel’s BriefCam, a video-synopsis and machine-learning solutions company for $90MN.
8. Israel’s pharmaceutical company, Eloxx, raised $50MN on NASDAQ (Globes, April 27).
9. Israel’s Ormat, a $3BN geothermal global company, acquired the Idaho-based US Geothermal for $110MN (Globes, April 25). Ormat received a $125MN loan from OPIC (Overseas Private Investment Corp.), in order to erect a geothermal power plant in Honduras (Globes, May 7).
10. Israel’s Delta Galil Industries signed an option agreement for the acquisition ofFrance’s Eminence for 125MN Euros (Globes may 7).