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(photo credit: Ariel Jerozolimski)
Israel’s exports continued to stagnate in the first quarter of 2014, according to figures the Israel Export and International Cooperation Institute released Wednesday.
In comparison with the same time period the previous year, Israel’s non-diamond exports rose only 1 percent in dollar terms, led mostly by pharmaceutical and electronic components.
Once those fields, dominated by two large companies (Teva and Intel), were removed from the picture, the remaining sectors registered a 2% drop.
Diamonds aside, pharma, electronics and chemicals (dominated by Israel Chemicals) represent nearly half of all Israeli exports, and the dollar value of their exports grew 5%.
Of the $12 billion of exports in the quarter, $2.1b. came from pharma (a 17% increase over the first quarter of 2013) and $1.1b. came from electronic exports (a 7% increase over the first quarter of 2013).
Chemical exports, on the other hand, fell 4% to $2.5b., the first drop after four straight quarters of growth.
All the remaining sectors combined produced $6.3b. of exports. Agriculture exports, for example, dropped 12%.
Export Institute chairman Ramzi Gabbay said the trend portended trouble for Israel’s economy, and called on the government to bolster export support. Every additional $3b. in exports equate with 27,000 jobs and a 1.5% increase in business productivity, he said.
“Without a resurgence of exports to levels the economy was used to in the past, the economy will not be able to return to the significant growth track necessary for the Israeli economy’s numerous challenges,” he said.
In its monthly debate on the interest rate, the Bank of Israel’s monetary committee drew the same conclusion about the stagnation of most Israeli exports, but sounded a more optimistic note on the success of hi-tech exports.
“Against the background of an increase in world trade, a trend of growth in exports is becoming apparent over time, as a result of an increase in exports and production of high technology industries.
Other manufacturing exports remain at a virtual standstill.”
One reason exporters face difficulties is the strong shekel, which makes Israeli products relatively more expensive on the world market.
The shekel’s nominal effective exchange rate strengthened by about 8.2% since the beginning of 2013, the bank said.