image Photo: Flash90

OECD: Israeli economy ‘remarkable, inspirational’

The Secretary General of the Organization for Economic Cooperation and Development (OECD) highlighted Israel’s economic prowess during a visit to Jerusalem.

By Jonathan Hessen and Erin Viner

“Since Israel joined the OECD in 2010, our partnership has gone from strength to strength,” OECD Secretary General Mathias Cormann said during a meeting with the Israeli Cabinet.

He added that the 38-member intergovernmental economic bloc has “been inspired by Israel in particular when it comes to innovation and digital security and water governance.”

Explaining that “many other policy areas” of joint cooperation includes broader economic reform, education, tax policy and other sectors, the OECD head underscored, “in recent decades Israel has done very well. As a result of ongoing structure reform, effective macroeconomic’ management. The economy in Israel has made remarkable progress.”

Israel’s economy is growing with an upward trajectory well beyond preliminary projections, particularly in light of the coronavirus pandemic.

“Israel has shown great resilience in the context of the unprecedented COVID-19 shock. With GDP now surpassing its pre-crisis level in the second quarter of 2021, which was a very good outcome, indeed. And Israel’s successful COVID-19 management has been one of the world’s most advanced and flexible, keeping Israel fully open to the fourth and fifth waves and it has been an inspiration to other countries the way has managed this,” said Secretary General Cormann.

Agreeing that the nation’s economy “is on a good track,” Prime Minister Naftali Bennett said that, “We’re recovering from the latest COVID wave remarkably well with rapid growth, of which you are well aware,” related to the government decision to “keep Israel’s economy open throughout the fourth and fifth waves while diligently fighting the virus.”

Emphasizing that the country’s expanding economy is fueled by several growth engines, first and foremost of which is its flourishing hi-tech sector, and that the economic trajectory is good, Bennett went on to acknowledge that Israeli still faces “a fair share of challenges.” Areas for improvement include the “courage” to reform stagnated areas of the economy and increase domestic competition, he said.

Israeli Foreign Minister and Alternate Premier Yair Lapid added that the government is doing what is necessary to address the Israeli economy on both an “immediate” and “visionary” track.

“As part of the immediate, we are contending with cost of living that continually rises; COVID creates a list of problems, including supply lines across the world, which are stuck; I recently visited Haifa port where ships are in lines that continue into the depth of the sea with cargo, commodities and raw materials which the Israeli economy needs. There is an energy crisis; a reduction of export markets; unexpected expenditure, there is a danger of inflation – the Americans are already above 7% (inflation); and the three leading economies worldwide  – i.e. the American, Chinese and Japanese ones – have updated their growth projections with negative trends. In the fact of all of this Israel is in good situation,” he said.

Lapid added that Israel’s technology sector “accommodates for the rest of the economy,” and praised Finance Minister Avigdor Liberman for “steering our ‘vessel’ with leadership, professionalism and responsibility.” He then pointed out that Israeli unemployment rates are very low, and revealed that “during the next several days we will provide assistance to self-employed who were hit by the crisis; there is surplus in the financial markets because of “unicorns” who streamed dollars into the economy.”

This government passed a budget based on the Keynesian Economic Theory, which calls for increased activities during times of crisis,” underscored Lapid, who also serves as Alternate Premier, adding that, “This allows us, before even work on the next budget, to define a vision for Israel’s economy for the next several years.”

Finance Minister Lieberman also attributed Israel’s economic success to “dramatic” government-enacted measures, including a comprehensive change of Jerusalem’s approach to management of the coronavirus pandemic.

“We took a number of dramatic decisions, which in retrospect may seem simple yet were dramatic when we took them; the first decision included forgoing all payments related to the joy of sitting at home while getting paid. All (governmental) payments for unpaid leave were revoked. Secondly, we took a principal decision to forgo on all lockdowns, we will learn to live with the coronavirus. The third decision included an end to ‘scattering money from helicopters’ – there is targeted assistance instead. And the fourth decision, which was led by the Prime Minister, which made us the first state to adopt, relates to the third booster, the third inoculation. And all of these things, truly, set us on track of beyond-expected growth, beyond those projected,” explained Finance Minister Liberman, stressing that these actions reduced the state deficit while increase of overall budget.