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
“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
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
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
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.