Steinitz, Brosh mull exchange-rate crisis

Finance Minister Yuval Steinitz at a meeting of th (photo credit: Ariel Jerozolimski)
Finance Minister Yuval Steinitz at a meeting of th
(photo credit: Ariel Jerozolimski)
Finance Minister Yuval Steinitz met with IsraelManufacturers Association President Shraga Brosh on Friday to discussalternative ways to stem the steep fall of the shekel-dollar exchangerate that is hurting exporters.
At the meeting, Steinitz said exports were amajor growth catalyst poised to help the country's economy emerge outof the crisis. He said he would convene an emergency meeting at theFinance Ministry to examine alternative solutions to assist exportersand strengthen the competitiveness of the economy.
"Last year's fall of the dollar has cost Israeli industrymillions of shekels," Brosh said. "I am convinced that the newgovernment and the finance minister are well aware of the repercussionsof a return to the shekel-dollar exchange rate of NIS 3.5 seen lastyear and will do everything to strengthen Israel's exports."
Last week, the shekel-dollar exchange rate slid to its lowestthis year, breaking the NIS 3.80 barrier on rising expectations theBank of Israel will halt its dollar-purchase program and will be amongthe first banks to hike interest rates.
Since the second quarter of 2008, industrial exportshave dropped by an accumulative rate of 18 percent in real terms, whileduring the same period the industrial sector laid off 20,000 people,5.5% of its workforce.
In a quarterly report published Sunday, figures by the IsraelManufacturers Association showed that industrial exports rose by amoderate 0.5% in real terms in the second quarter of the year, led by asharp increase in electronics exports.
"Intel Israel and exports of electricalcomponents lifted export data, but the majority of industrial exportsare still in decline," said Ruby Ginel, deputy director of theassociation's economics and regulation division. "In the second quarterof this year, industrial exports grew by a moderate 0.5% in real terms,to $8.4 billion, in comparison with the first quarter."
Trend figures published by the Central Bureau of Statistics atthe end of last month showed that exports of goods, not includingdiamonds, rose by an annualized 1.2% in the months April to June, afterdeclining at an annualized rate of 23.9% in the months January toMarch.
Ginel said the modest increase in exports in the second quarterwas led the 11% rise in hi-tech exports, which was driven by a sharpjump of 66% in exports of electrical components and the start ofoperations of the new Intel plant in Kiryat Gat. Not including exportsof the electronics-component sector, industrial exports dropped 4% inreal terms in the second quarter of the year.
"Despite the moderate rise in exports in the second quarter ofthis year, the industry has lost more than $6 billion in export volumesince the beginning of the crisis in September 2008 until June 2009,"Ginel said.
Sector-by-sector analysis of the quarterly report showed thatin the mixed-hi-tech sector, which includes, chemicals, machinery andequipment, exports plunged 5% in real terms, led by a sharp drop of 20%in real terms in the chemicals sector. From the beginning of the year,exports within the mixed-hi-tech sector fell at a accumulative rate of25%. 

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