Deloitte: Readiness for change questionable

The positive economic indicators are also being recognized internationally.

International consultants Deloitte praised the Israeli economy for moving in the right direction thanks to responsible macroeconomic policy, necessary budget and tax cuts and, above all, the understanding that competition is the name of the game. "The Israeli economy, together with the global economy, is continuing to safeguard positive momentum in all the important economic parameters," said Yigal Brightman, Chairman and CEO of Deloitte Brightman Almagor at the "Annual Capital Market" conference this week. "Today Israel can be found on the global radar map." Brightman added that the internal parameters spoke for themselves with expected domestic economic growth of 5.3 percent for this year, while gross domestic product grew 6.6% in the first quarter and unemployment was coming down. The positive economic indicators are also being recognized internationally. "Israel has been rated number 20 as part of the global ranking of 61 strongest economies," said Brightman. "Over the past year, $11 billion have been invested into Israeli corporations, [including] $6b. in the beginning of this year." However, addressing repercussions of the Bachar reform, Brightman warned that there were still some unanswered questions, such as whether the economy was ready for the changes. "We need to ask whether the country is prepared for the transformation of insurance companies into financial institutions? Whether insurance companies in their new capacity have the ability to be part of the retail market such the credit business and non-banking finance? And whether regulation is tailored to the new era?" As to where the market was heading, Ilan Birnfeld, managing partner of Deloitte Brightman Almagor, said the high level of returns the economy saw over the past two years would not come back unless the risk level of the economy drops dramatically. "Today the low risk level in the current economy is already accounted for in market prices," Birnfeld said. He called on Israeli hi-tech companies to upgrade in order to fit and adjust to the changing market situation whether at end-user level or regarding sources of raising capital. "As today there are worrying indicators from the US market, the hi-tech market in Israel will need to look afar and be tailored to alternative markets such India and China, in order to keep its competitive edge." Birnfeld noted.