Analysts to ‘Post’: 2013 turning point for Israel

‘I see it as a year of moving from seven years of plenty to seven years of want,’ says one expert

By
March 5, 2013 23:37
2 minute read.
Israeli gold bullion coins

Israel gold bullion coins money wealth economy 370. (photo credit: Eli Gross/Keren Or)

This year will mark a turning point for the Israeli economy, a panel of experts told The Jerusalem Post at a quarterly economic round-table, saying the government must act to reform and address the vast inequalities of society.

“I see it as a year of moving from seven years of plenty to seven years of want,” Gideon Ben-Noon, CEO of ShekelAgio, a financial group. While Israel has continued to enjoy economic growth, he notes, it has been very concentrated, and the equality gaps continue to grow.

Ziv Mandl, co-CEO of Matrix Global, agrees, but only to an extent. “I’m not sure it’s seven years of wanting,” he said, pointing out that Israel has succeeded in the face of numerous challenges. The economy, he said, bears the fruits of investments it has sown in the past, which are running out.

The coming year will require Israel to change course in order to stay afloat.

“The centrifuge started slowing, and that requires the Israeli economy to change its thinking,” added Israela Many, the chief economist of the Federation of Israeli Chambers of Commerce.

Amir Kahanovich, chief economist at Clal Insurance, said that two of the problems facing the economy are out-of bounds workers organizations and over-interference from the government itself. “There’s a problem of intense economic interference by the government,” he said.

Poor planning means the government inevitably makes retroactive changes, which build uncertainty into the business environment. He offered as an example changes to the royalty schemes for gas. The state would be better served looking ahead to the long-run instead of rushing into decisions it later regrets, Kahanovich said. The government also must act to reign in labor groups run amok. “Workers committees can be fatal to a business,” he said. “And the laws here allow them to do it.”

Kahanovich vividly likened some labor activities to a person urinating on themselves: “At first it’s nice and warm, but after a while it’s annoying and gross.”

Journalist Sharoni Yehuda elaborated: “The government meddled in too many populist price issues, took little action on reforms, and left many of the Trajtenberg committee’s recommendations unattended, all while Intel decided to build its latest plant in Ireland instead of Israel. It was a wasted year, I would say.”

Tal Zohar Avda, CEO of FXCM, agreed, saying 2012 was a year in which Israel put off the crucial issues. Inflation, while moderate, hit the lower classes hardest as it was concentrated in necessary goods like water, food, electricity and transportation, he lamented.

On the bright side, said Many, the delay on making choices in 2012 leaves much room for improvement.

“[This year] and 2014 will be test years to see if these workers committees are wrenches in the wheels of businesses, a return to the 80s,” she said, before adding: “I think 2013 is a year of incredible opportunity.”

Read the full report in the Passover issue’s Economic Magazine.


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