Preliminary export figures analyzed by the Israel Export and International Cooperation Institute indicate that exports were flat for the second straight year. Exports of goods and services, excluding start-ups, totaled $92.5 billion in 2013, the same as in 2012. Diamond exports totaled $9 billion in 2013, 8% more than in 2012.
Excluding the sale of start-ups, exports of services totaled $31 billion in 2013, 4% more than in 2012. Exports of services including the sale of start-ups totaled $33.5 billion in 2013, 8% more than in 2012.
Export Institute chairman Ramzi Gabai said that the preliminary data for 2013 reflect the difficulties exporters faced from the increasing erosion of their competitiveness in foreign markets caused by the strengthening of the shekel during the year. "We hope that, in 2014, the decision-makers at the Ministry of Finance and the Bank of Israel will make every effort needed to stem the steady strengthening of the shekel against the basket of currencies, after the exchange rate hit a ten-year low," he said.
The Export Institute fears that exporters will struggle in 2014 to reap the rewards from the projected economic growth in the US and Europe, which account for 60% of Israel's exports. It warned that the strong shekel is liable to wipe out the positive effects of the economic recovery in these markets for Israeli exporters.
Export Institute VP economics Shauli Katznelson said, "The strong shekel, combined with rising salaries and other shekel inputs, are seriously eroding exporters' profitability and harming their competitiveness."
Belying calls by exporters and manufacturers to the Ministry of Finance and the Bank of Israel to take monetary steps to weaken the shekel in view of the condition of the dollar, Federation of Israeli Chambers of Commerce president Uriel Lynn said in a letter to Minister of Finance Yair Lapid and Minister of the Economy Naftali Bennett, "The strong shekel is not a curse, but in many ways a blessing."
"The strong shekel has many advantages for the Israeli economy and general public. We save a lot on the cost of energy imports. Raw materials and intermediary products cost less now, and the strong shekel boosts workers' purchasing power without the need for pay hikes. This makes it possible to lower costs of imports and help reduce food prices, provided the high barriers to imports of these goods are lowered."
Lynn said that the government should help exporters and manufacturers to improve their competitiveness in foreign markets by lowering input costs on the business sector, such as arnona (local property tax), railway transport prices, and extensive streamlining at the seaports.
Published by Globes [online], Israel business news - www.globes-online.com - on January 5, 2014
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