Treasury seeks to help exporters

Exports to US plunge 30% through June, but electronic components up 500%.

Steinitz elbit 88 248 (photo credit: Finance Ministry)
Steinitz elbit 88 248
(photo credit: Finance Ministry)
Finance Minister Yuval Steinitz and a delegation of Treasury officials visited factories in Sderot on a fact-finding mission Tuesday. "We are visiting Sderot and the Gaza Strip periphery to understand the needs of the area and the factories to learn how to help them," he said. During tours of factories of food company Osem Investments Ltd. and defense company Elbit Systems Ltd. in Sderot, Steinitz met with managers and workers to get an overview of the economic situation. Over the coming months, he said, he would be visiting factories across the country that have suffered from economic and security threats over the last few years. Steinitz said he welcomed the Bank of Israel's change of policy in the foreign-exchange market and its decision to halt its daily purchases of $100 million. But he emphasized that governments could no longer fix exchange rates. Israel Export Institute chairman David Artzi on Tuesday told the Knesset Finance Committee exports were contributing 50 percent to the growth of the economy. An increase of $3 billion in exports adds 33,000 jobs, narrows the unemployment rate by 1 percent and raises gross national product by 1.2%, he said. "I call upon the government and the Bank of Israel to continue to take the necessary measures to help weaken the shekel and strengthen the dollar opposite the basket of currencies over the next couple of months," Artzi said. Since the last quarter of 2008, the depreciation of the dollar has lowered exports of goods and services, not including diamonds, by $2.5b. to $3b., he said. The export institute published a report showing that exports to the US plunged 30% in dollar terms in the first six months of the year to $7.5b. compared with the same period last year. It expects exports to the US throughout 2009 to fall by 24% in dollar terms to $15.2b. Over the last decade, exports to the US, including diamonds, rose 10% in dollar terms on average, the report said. Exports to the US, not including diamonds, dropped by 10% in dollar terms to $5.3b. in the first half of the year and are expected to fall by 12% to $10b. for the entire year, the report said. Hi-tech exports to the US rose by 4% in the first six months of the year, mainly led by a surge in electric-components exports, which made up 24%. Exports of electronic components to the US jumped by 500% in the first half of the year to $872 million from $147m. in the first half of 2008. However, hi-tech exports to the US in 2009 are expected fall by 18% in dollar terms, the report said.