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Who Saved the Israeli Economy?

Here are some excerpts from an insightful article from Globes. Full article here

The Israeli economy’s rate of growth has returned to the levels prior to the start of the sub-prime crisis in the summer of 2007.

The growth in GDP can be explained by an impressive rise in exports of goods and services – almost 16% on an annualized basis in the second quarter of 2010. Israel’s high-tech and defense industries made a major contribution to the “Israeli miracle.”

There was also a jump in residential construction activity. There was a rise of 9.2% in investment in homes in the first half of 2010, after a 6.1% rise in the corresponding half of 2009.

The explanation for the success of the economy can be found in a statement by  Bank of Israel Governor Prof. Stanley Fischer who said at the end of 2009: an economy that goes into a crisis in a strong situation will succeed in surviving in a better state. Financial stability, high levels of savings, the fact that the previous government resigned in the summer of 2008 and did not have enough time to increase government expenditure Рall these gave the Israeli economy, the base to successfully negotiate the crisis.

It could be of course that the results of the crisis in Europe and the fall in US growth will only be felt in Israel in the second half of 2010. Nobody will be surprised if that is the case. But for the time being, the Israeli economy continues to show signs of strength.

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