The Israel Export and International Cooperation Institute is worried about the drop in high-tech exports, with the exception of avionics, electronic components, and pharmaceuticals. It reports $3.7 billion in high-tech exports in the first half of 2013, 8% less than in the first half of 2012 - the lowest figure in three years.
High-tech exports began falling in the fourth quarter of 2011, and the slide continued through 2012, with a 3.3% drop.
The Export Institute's data indicate that, weighted for avionics, electronic components, and pharmaceuticals, high-tech exports rose by 5.5% in dollar terms, to $10.3 billion. But this growth was mostly due to large exporters, including Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) and Intel Israel Ltd., and deliveries of goods by defense industries under previous contracts.
"The data are worrying, and indicate a decline in the export capabilities of Israeli high tech," says Export Institute chairman Ramzi Gabbay. "The decline is clear, and is due to the ongoing drop in market demand, reduced global trade, and the weakness of the dollar."
The Manufacturers Association of Israel today published a survey of expectations of 150 companies, which found a steady slide in the profitability of Israeli exports. 52% of respondents reported lower profit margins on exports in the second quarter of 2013, compared with 6% of respondents who reported higher margins. 35% of respondents predict improved exports in the third quarter, due to increased orders.
"The steady drop in industrial exports, which until recently was the engine for economic growth, should worry all of us," said Manufacturers Association economic research department director Dafna Aviram-Nitzan. She called on the Bank of Israel to increase its intervention in the foreign currency market and to expand interest rate cuts in view of the strengthening of the shekel against the dollar.
Despite the weakness of high-tech exports, the Export Institute reports $23.7 billion in total exports in the first half of 2013, 4.5% more than in the first half of 2012. It attributes the growth to higher exports of pharmaceuticals, electronic components, and chemicals, which more than offset lower exports by other high-tech sectors.
Published by Globes [online], Israel business news - www.globes-online.com - on August 5, 2013
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