Manufacturers expect sharpest drop ever in exports

However, the new Intel fab in Kiryat Gat is expected to cut the drop by about a third.

The Manufacturers Association of Israel predicts that Israeli exports will fall by 10% in 2009 to $35 billion. The prediction is based on projections of international trade in goods.

Manufacturers Association Department of Economic Research and Strategy director Daphna Nitzan-Aviram said that Israel has never experience such a sharp fall in exports. She predicts that the drop in exports will ease to 2.5% in 2010.

Nitzan-Aviram says that global trade is expected to shrink by 3.5% in 2009, far worse than the 0.3% contraction experienced in 2001. On the basis of this figure, Israeli industrial exports can expect to fall by 16%.

However, two factors will ameliorate this fall. The first is Intel's new Fab 28 in Kiryat Gat, which is expected to export $1.5-2 billion worth of processors in 2009, which will shave 4.5-5 percentage points - a third - off the expected plunge in exports. The second factor is improved competitiveness of Israeli industry, on the assumption that the shekel's weakness persists, and even increases, over the coming year. This will improve Israel's terms of trade and could offset part of the effect of falling global trade and improve exporters' profits.

Published by Globes [online], Israel business news - www.globes-online.com - on February 22, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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