The dream and its destruction: Israel will still face the global crisis

While the world is already feeling an economic slowdown, in Israel everything is flourishing, building and growing.

The good news is that Israel will meet the crisis that will begin in Europe in a month or two in a good situation, perhaps the best in the world.

The bad news: in a global economy, even we can't avoid the coming depression

Shlomo Ma'oz

16/09/2022

Friday, September 16, 2022, 09:35 Updated: 09:44

• Share on Facebook

• Share on WhatsApp

• Share on Twitter

• Share by email

• Share in general

• Comments

  Comments

Dream: The number of jobs in Israel reached an unprecedented peak, according to temporary data for the month of July, "flash data" according to the definition of the Central Bureau of Statistics, reached 4.25 million, an increase of 5.2% compared to July last year, and even an increase of 0.5% Compared to June this year.

It has never been like this, perhaps since the 1950s when Israel was built in a hurry with the massive waves of mass immigration.

Everywhere you turn, cranes in residential construction fill the landscape, an Israeli phenomenon these days compared to Europe where a real slowdown is felt.

It's no wonder that the income from real estate taxes increased in the first eight months of the year by 45% to NIS 18.4 billion! Wherever you turn, you will find that squares have been added to the landscape, some well decorated to glorify mayors and local authorities, on the eve of upcoming elections. Excavated roads Or from Korzafim, a street that only the day before yesterday they were driving on, is blocked off and becomes a construction site, the laying of sewer, water and gas pipes, the construction of more and more employment centers until there is no more free space to establish a factory or business. Office skyscrapers house high-tech companies springing up in the cities and in their navels. The result , the income tax from self-employed persons and companies has increased by 25% since the beginning of the year. Despite a branching and innovative road network in recent years, endless traffic jams are created on highways, including toll road number 6. Revenues from fuel taxes have remained unchanged since the beginning of the year: NIS 12.5 billion, despite The reductions in the excise duty rate on gasoline.

The number of Israeli workers alone, that is excluding foreigners, reaches about 4 million, an increase of 5.1% within a year, the rest, another quarter of a million workers are foreigners, Palestinian workers and "tourists" who forgot to leave.

The unemployment rate of Israelis was 4% in July after it was already at 3.7%, it is possible that the increase in the unemployment rate is the increase of entry possibilities for Palestinians living in the territories, including Gaza, to Israel.

Cranes everywhere, while there is a slowdown in Europe (Photo: Reuven Castro)

In any case, this is low unemployment, close to "frictional" unemployment in the language of economists, which indicates that there will be more wage increases in the economy.

Simply because there are no workers available.

In almost every field it is difficult to find employees.

The number of vacancies stands at 148,000.

Against the background of abundance from all sides it is no wonder that the consumer confidence index for the month of August rose to minus 19% after minus 23% in July.

Since November of last year, the consumer confidence index in Israel, according to the data of the Central Bureau of Statistics (which operates according to the methodology of the Organization for Economic Cooperation and Development, the OECD} has been on a constant rise. Israel was for years at the bottom of the consumer confidence index, today it is in fourth place, behind Trailing, with a lower index: France, Belgium, Sweden, Germany, Italy, the Netherlands, Portugal, Austria, Spain and the U.K. Only Finland and Denmark are the main European countries with a higher index.

The demand for workers is so strong, which prevented a sharp decrease in the real wage as abroad. The real wage, which is the wage minus inflation, the wage decreased by only 1.4% in the last year. This means that many employers pay wages and wage increases due to price increases of imported inputs from abroad "L, which may harm their profitability.

They pay both more for the inputs and they are compensation to the workers for an increase in the inputs they have no arm or leg, which leaves them only one way, to raise or try to raise prices.

In July, according to the flash providers, the average wage in Israel for Israeli workers was NIS 12,117 per month, a nominal increase of 3.4% compared to July last year. With such employment rates, the treasury's pockets are full of income tax collection, despite the expansion of credit points and "negative income tax" What is his income? He increased his income from direct taxes in the first eight months of the year by 20%, an increase of 37 billion shekels to 178.5 billion shekels. The increase in the state's income from direct taxes in addition to the increase from indirect taxes and real estate taxes.

It is interesting that despite the sharp increase in the value of the shekel against most of the currencies in the world, a sharp appreciation of the shekel, the number of workers in industry and factories increased in the last year to June by 13,900 to 352,700, an increase of 3.9%.

The demand for Israeli products is apparently increasing, even in a difficult environment of increasing competition in a world most of which is suffering from a real economic slowdown.

Another branch that added workers due to its expansion is construction, more and more apartments are being built, the number of workers in construction increased by 26,800 to 211,000, an increase of 15% in the last year.

employees only

The retail and wholesale trade, against the background of a sharp increase in the standard of living, added 34,200 employees to 508,000 employees, an increase of over 7%.

Scientific and technical professional services an increase of 20,800 employees to 273,000 an increase of over 8%.

Although we feel that the financial and insurance services are in retreat, because the bank does not respond, there was an increase of 7,500 employees in the last year before June 2022, to 111,000 employees - an increase of over 7%.

The highlight is the food and hospitality industry, with an increase of 34,000 employees to 224,000 employees, an increase of 18%.

Spending time in restaurants is increasing as the corona is behind us.

good to know (in advance)

The facial treatment revolution: artificial intelligence and RF technology in a home device

Served on behalf of B Cure Laser

A gloomy gust of wind from the direction of Britain (Photo: Reuters)

The world is raising interest rates non-stop, even the president of the politicized European Central Bank, Christine Lagarde, had to raise the interest rate this month by 0.75% from zero to 0.75%.

The Bank of Israel will be forced to raise the interest rate at the beginning of October by at least 0.5%, to 2.5%.

In fact, the interest rate should be raised by 0.75% in order to suppress inflation in Israel.

Inflation in Israel, which until now has resulted from an increase in input prices, as in most of the world, will begin to rise in the coming months due to close to full employment.

Wage increases are currently expected in the business sector and next year in the public sector with the opening of wage agreements.

The justified salary increases for the teachers are only the first wave of salary increases that will take place next year.

It doesn't matter which government is formed, the pressures will increase.

Or then we will get an alarming inflation of wages.

Growth in Israel is expected to end this year at 4.8% according to the latest OECD forecast, in practice growth will be higher, perhaps over 5.5%.

Next year the organization predicts a growth of the Israeli economy of 3.4%, but my assessment is that the actual growth will be much lower for the following reasons: the continuation of interest rate increases in Israel which will affect the Israeli real estate market where prices have reached new highs, and mainly against the background of the collapse of the European economy in the winter the battle

Let them eat lentils

The Europeans were ready to sell Israel for a Persian lentil planter in the nuclear agreements, the main thing being that they would have oil in large quantities to heat Europe in the winter of the battle that would freeze it and its industry and homes.

The nuclear agreements with the Iranians once again fell through, and we are close to October: the cold is approaching, already around the corner.

The supply of gas from Russia is low and there is no supply of oil and gas from other sources.

It is true that the OECD expected growth in the Eurozone of 2.1% in June and another 1.6% in 2023, but in practice the growth will be much lower because there are not enough energy sources to operate the factory, industry and services in the cold of battle.

Ask, what's the deal with sleeping at Mount Sinai?

Well, Israeli exports to the European Union constitute 29% of all Israeli exports, another 9% are exported to other European countries (which are not part of the Union).

In other words, more than a third of the exports from Israel are to the countries of Greater Europe.

Germany, the pride of the European Union, is growing this year by barely 1.2% and next year will grow only 0.8%.

Italy expects next year growth of 0.7%, France for 1%.

The British economy - and Britain is not a member of the European Union - is about to collapse and even crash within a few months due to a lack of energy, workers, with inflation that may reach tens of percent and mismanagement.

In August only three regions of the UK, out of 12, experienced growth.

This year Britain will grow by maybe 3.2%,

An entire country went bankrupt.

Sri Lanka at the time of the coup in July this year (Photo: Reuters)

A real slowdown is also registered in Chinese growth, to which Israel exports 8% of all exports, and another slowdown also takes place in other Asian countries to which Israel exports 14% of all exports.

Of course, we will not mention the shattered Russia and the other countries of the world that are in visible difficulties accompanied by inflation and existential crises, such as Sri Lanka that went bankrupt.

The USA, to which Israel exports 22% of all exports, will grow next year by only 1% after 2.3% this year (according to the International Monetary Fund).

around the corner

The impending global crisis has not disappeared from the eyes of the businessmen, traders and shipping companies.

Demand is already decreasing in world trade, while the number of ships and containers is increasing.

Marine shipping rates in containers have dropped by 20% since the beginning of August, shipping rates in containers from China and Southeast Asia to the Mediterranean basin, i.e. also to Israel, have dropped by 27%, bulk shipping rates in the world have dropped by a third since the beginning of August!

These are indications of a decrease in the expected economic activity.

Therefore they said: The dream was broken.

The sharp increase in interest rates in Israel, a decrease in Israeli export potential, weakness in the world markets, risk to the financial markets, all endanger growth and wealth in Israel.

Just as the prices of apartments and houses have started to fall right now around the world, even in the high-tech state of California, due to a sharp increase in mortgage interest rates, an economic crisis, inflation and an increase in the public's sense of wealth, so the situation in Israel will change in the coming winter and spring.

Israel is part of the global world in all areas, Israel is heading towards the crisis in a good situation, perhaps the best in the world, but even it will not be able to avoid the impact of globalization, this time for its shortcomings.

• Of money

• our money

Tags

• financial crisis