Israel's share of global export pie shrinks

Fewer than 3% of local companies account for 84% of outbound shipments.

percent 88 (photo credit: )
percent 88
(photo credit: )
The weight of Israeli exports in world trade has gradually declining gradually by some 25 percent over the past six years, despite the fact that shipments of Israeli goods and services rose by 36% during the same period, the Israel Export & International Cooperation Institute said on Tuesday. "One of the main reasons for this development is that global economies have been growing at a faster pace increasing their levels of export growth," Yechiel Assia, the director of the Institute told The Jerusalem Post at the group's annual meeting in Tel Aviv. "We need to further boost production and increase the growth of exports to be able to compete and match the [global] pace." Assia noted that in the year 2000, the share of Israeli exports of goods and services in total world imports was 0.56%, but that number fell to 0.42% in 2006. "Israeli exporters are faced with difficult challenges regarding exports to strong world economies," said Assia. "For example, Japan, the second largest economy, is placed at number 11 in the ranking of Israeli exporting countries and China, the fourth largest economy, is ranked at number eight." David Artzi, chairman of the Institute, called upon Israeli companies to increase exports to China, India, Japan, Brazil, Russia, South Korea, Mexico and Vietnam. "The potential in these markets for Israeli exporters is valued at over $100 billion,"Artzi emphasized. Similarly, President of the Manufacturers Association of Israel, Shraga Brosh said that despite the boost in export growth in recent years, the weight of Israeli exports in terms of gross domestic product was still low in international comparison. "Israeli exports currently constitute about 45% of GDP, which is lower than in many other countries such as Belgium, where exports constitute 90% of GDP or Ireland where exports make up 80% of GDP," said Brosh. "I call upon the Israeli government to make it a strategic target to boost the weight of exports in terms of GDP to at least 80%," he said. In order to reach this target, Brosh said exports would need to grow at an annual rate of at least 12%. Economists at the Association indicated that the country's export potential was not being realized as 84% of all exports were being generated by less than 3%, or just 330 out of 11,000 export companies. At the same time about 50% of all industry exports were being generated by the hi-tech industry, mainly in the electronics sector. Also speaking at the conference, Industry, Trade and Labor Minister Eli Yishai, emphasized the importance of putting the development of the traditional industry particularly in the periphery at the center of the ministry's strategy to increase exports. "We are launching a NIS 80 million assistance program to help small- and medium-sized companies in the periphery to double their exports within a short period of time," Yishai announced at the meeting. "Small- and medium-sized companies, which represent more than 95% of all businesses in Israel, are one of the means to reach the economic targets Israel has set itself." The Israel Export & International Cooperation Institute expects exports of goods and services in 2007 to grow by 10% to $70b. from the NIS 63b. in 2006. In 2008, Israeli exports of goods and services are forecasted to grow at a similar rate of 10% to NIS 77b. Trade and services sector adds 25,000 workers The work forced in the trade and services sector grew by 2.2 percent in the second quarter of 2007 to 1.18 million workers, the Federation of Israeli Chambers of Commerce reported on Tuesday. The sector employed 25,000 workers during the period, of which 14,000 were recruited in the business services sector, 7,500 workers were employed in the trade sector and 4,000 in the banking, insurance and finance sector. In addition, the hospitality and food sector added 1,400 workers during the quarter. Growth in this sector indicated a sign of recovery of the hospitality and food sector, which experienced a decline of 0.5% between the last quarter of 2006 and the first quarter of this year.