Israel’s Economy 5 Good Years

October 31, 2007

“Since the beginning of 2003, investors have earned a 100% return in dollar terms in long-term Israeli government non-CPI linked bonds,” Vered Dar, chief economist at Tel Aviv investment house Psaget Ofesk told ISRAEL21c. “Equity investors have earned 250%.”

Ori Hershovitz of the Sphera Fund credits former Finance Minister Binyamin Netanyahu’s pursuit of privatization during his tenure for the economic boon. “The government has no business in being in the business of banking or flying. Netanyahu’s push to privatize previously held government companies like El Al and the banks was good for the Israeli economy. Since these companies no longer need to tap the bond markets for capital, there was less demand for money and interest rates were lowered.” Others, reports ISRAEL21c, credit Stanley Fischer, the governor of the Bank of Israel, as well as Israel’s human capital. Israel leads the world in patents per capita for medical devices and ranks third per capita in overall patents.

Despite the Second Lebanon War last summer, the government is now experiencing a US $2 billion surplus due to strong earnings growth and increased tax revenues from Israeli corporations, reports microanalyst Avinoam Nachum.

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