Floating gas production rig/ Photo courtesy Energean
While February was a month of continued downsizing by many Israel Startup Nation firms and political turmoil in the country over its government’s judicial reform plans, there were still a number of positive business stories last month. These ranged from new defense contracts, historic events in Arab nations and a historic first.
For the first time in history, Israel has its own pavilion at the Abu Dhabi Defense Exhibition in the United Arab Emirates. The Israel Ministry of Defense inaugurated the first-ever national pavilion at the “IDEX” defense exhibition. And in yet another sign of the growing relationship between Israel and the United Arab Emirates (UAE), at the IDEX conference the two nations revealed a new jointly developed autonomous marine defense vessel.
The new naval vessel is unmanned, making it sort of a drone of the sea. It was developed in cooperation between Israel Aerospace Industries (IAI), ADSB (Abu Dhabi Ship Building) and the Emirati defense consortium EDGE. It was revealed just one year after a commercial cooperation agreement was signed between the companies.
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Also, Israel is swimming in hard foreign currencies like the US Dollar, the British Pound and the Euro. The Bank of Israel (BOI) reported that Israel’s foreign exchange reserves at the end of January 2023 stood at $201 billion, an increase of $6.782 billion from their level at the end of the previous month. The level of the reserves relative to GDP was 39%.
Inflation was still high, but also lower than in the US and Europe. To fight inflation, the Monetary Committee of the Bank of Israel in February raised the interest rate by 0.5 percentage points to 4.25 percent. The reason, of course, is the continuing problem of inflation.
And Israel is seeing a jump in tourism to its pre-Covid Crisis levels. While world travel everywhere has rebounded, this is especially important for a small country like Israel that has always been dependent on international tourism for its economy. While Israel is also known as Startup Nation, raking in billions a year from its high-tech industry, the country is still largely dependent on income coming from its tourism industry.
According to data released by Israel’s Government in February, in January 2023, 257,400 tourist entries were recorded (as opposed to 46,200 in January 2022 and 284,800 in January 2019). This represents a 547% increase on January 2022 (a month in which Israel’s skies were still closed to tourists) and a decrease of only 9.6% on January 2019, which was a record year for incoming tourism.
Also in February, the Bank of Israel released its Financial Stability Report on Israel’s economy in the second half of 2022 and the outlook was good. Israel clearly did better than most developed nations during the worldwide financial crisis of 2022, with lower than average inflation and continued investments in high tech startups. However, Israel did see a lot of contraction and shutdowns even in Q4 2022.
And one of the best stories in the month was a historic first for Israel. Energean, the British energy company which operates Israeli natural gas fields in the Mediterranean Sea, announced that for the first time in its history, Israel is exporting hydrocarbon liquids in the form of crude oil. The fuel was extracted from Israel’s Karish offshore gas field in the Mediterranean.
