Bennett: Despite critics, Israel’s economy is strong

Minister touts growth in exports, hi-tech development at Tel Aviv conference.

Naftali Bennett (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Naftali Bennett
Economy Minister Naftali Bennett is tired of hearing people complaining about the state of the economy.
“In recent times there is a trend of saying how bad everything is in Israel, and I want to say that it’s good in Israel,” he said at the Foreign Trade Conference in Tel Aviv.
“We have a strong economy, we have an economy that is growing very nicely, our exports to Europe are growing – they grew nearly 10 percent in the last year – our hi-tech is at a record in terms of Israeli companies’ IPOs and the number of new investments in Israeli companies,” he continued.
Half of Israel’s exports were hi-tech, a statistic he said was unmatched in the world.
Bennett conceded that housing remained too expensive, and took an apparent dig at former finance minister Yair Lapid for it.
“The cost of housing is too high because we dealt with in-the-clouds ideas instead of creating supply,” he said.
Lapid had championed a plan to exempt some young couples from value-added tax on new home purchases, which economists said was an ineffective solution that would only boost demand.
Bennett’s focus on exports was no coincidence given the theme of the conference, which drew 700 mostly private sector participants to learn how the government can facilitate exports. The conference brought more than 40 of Israel’s economic attachés from around the world under one roof to help companies learn the specifics of major and growing export destinations.
“Exports are really the locomotive of our growth, not only in Israel, but around the world,” said Ohad Cohen, director of the Foreign Trade Administration in the Israeli Ministry of Economy. Exporters’ “productivity is the highest, they’re the best employers, the salaries that they pay are higher than average and their products are the best because they compete globally, so we want to put an emphasis on them.”
Israel has been changing its export focus in recent years, an attempt to diversify the countries it exports to, said Cohen. Israel recently closed export offices in Vienna, Sweden, Budapest and Helsinki to shift resources to places such as Bangalore, Rio de Janeiro and Hong Kong.
A larger variety of export partners will help shield Israeli economically if some of them hit road bumps, and also politically.
“The Chinese don’t care about the political issues. They know Israelis are smart, and that’s it. It doesn’t mean they will always be aligned with our political views, but when it comes to practical matters, they understand that Israel is a hub of innovation and they want to do business,” said Cohen.
Giving an overview of global economic trends, Wall Street Journal columnist and former Jerusalem Post editor in chief Bret Stephens said the most important economic trend is the resurgence of the United States economy, as seen in the strength of the dollar. A strong dollar against a global economy that is generally floundering would mean more exports to the US, and also fuel the trend of cheap oil, he said.
Further, it could mean that emerging markets have more trouble paying their dollar- denominated debt, a factor that fueled debt crises in the 1990s.
For Israel to best navigate such waters, it should strive to become a “boutique country” such as Switzerland and Singapore, small countries that have reputations for excellence and global brands. To do that, Stephens said, Israel would have to increase foreign direct investment, which he estimated was less than a 10th of Romania’s, make doing business easier, and boost the quality of life to stem brain drain.
Israel should always ask itself, “Why not the best?” he said.