Special interview - after the warnings of rating agencies. Prof. Avi Simhon, Chairman of the National Economic Council and Economic Adviser to Prime Minister Benjamin Netanyahu, was a guest on Israel Hayom's "Added Value" podcast on Wednesday. Referring to the economic crisis and the future of the Israeli economy, he argued that the country's economic outlook is significantly better than most countries in the developed world.
Morgan Stanley, Moody's and Citibank warned yesterday against investing in Israel. Are you bothered?
"First of all, it's not a good time. There is definitely a crisis now. But I believe this is a crisis that will pass quite quickly. In the end, the bottom line is that Moody's said that we are going to grow by 3% in the last two years, I want to mention that the forecast for growth in the EU and the US is less than 1%. If Moody's still says we're going to grow at 3% a year, that means we're in a significantly better position than most of the developed world."
But you can't ignore the situation in high-tech and the dramatic drop in foreign investment.
"True, high-tech has been the locomotive of the Israeli economy for a very long time – a great locomotive that has been pushing the economy well for a very long time, thanks to which we have grown much faster in recent years than the rest of the developed world. But we have to distinguish between two things – capital raising and real activity. So the volume of production in high-tech is on the rise, even in the current year.
"Regarding the second aspect, the volume of investments, here there was a very large decline, we returned to 2019 levels, but there was also a decline in this in the world in high-tech investments because the interest rate increased and there was a diversion of investments from high-tech to bonds both in Israel and abroad. So you don't have to go very far and look for explanations as to why there has been a decline in investment."
But the world is recovering, and Israeli high-tech is still deep in crisis.
"I'm not saying everything is great, there's nothing to worry about. The explanation of the high interest rate is more significant. Is there also a matter of sentiment? Yes, I think there is concern, there is no argument to try to sweep it under the rug. People look at the Israeli economy and see demonstrations here every week, see that there is unrest here, and ask themselves if this is leading. What I hope will happen is that when the dust settles and things become clearer, everyone – including Israelis and foreigners – will see that there is an economy here whose foundations are very strong."
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