Seasonally adjusted exports of services from Israel totaled $3 billion in May, the Central Bureau of Statistics today reported, 5.2% less than in April, and the same as in May 2015. Exports of services have been regarded as the economy's growth engines in recent years, with high growth rates, but have been stagnating since 2015, while exports of goods have been dropping.
Israel's foreign trade figures indicate a downtrend in exports of goods since the end of the 2015, following relative stagnation in 2011-2015. Ministry of Finance chief economist Yoel Naveh attributed the decline to microeconomic factors (that do not indicate a weak economy), without which exports of goods would have remained at their levels before the downtrend. "The drop in industrial exports (and exports in general) is due mainly to lower exports of chemicals and electronics components. These decreases result from sectorial factors, some of the temporary (the drought in Southeast Asia, upgrading of the Intel fab)," Naveh writes.
In chemicals, for example, there was a substantial drought in India in February-March 2016,which halted imports of potash into the country during these months. Naveh notes that Israel Chemicals (TASE: ICL: NYSE: ICL) signed new potash exports contracts with India in July, which is expected to boost potash exports in the coming months.
Pharmaceuticals are the largest high-tech export sector. This sector's exports have been relatively stable in recent years (at the annual level). At the same time, pharmaceutical exports fell sharply in February, then recovered substantially in the succeeding months, and their current level is close to that of January 2016, before the steep decline.
Imports of energy products grew substantially in the second quarter, following the rise in global oil prices, while the quantity imported was unchanged. Imports of vehicles, on the other hand, soared 70%.
Given the rise in imports of goods, compared with the decline in exports of goods, the balance of trade in goods has been negative since the beginning of the year. The total trade deficit in the first half of the year, including ships, airplanes, and diamonds, was $6.64 billion, more than double the deficit in the corresponding period last year.
Published by Globes [online], Israel business news - www.globes-online.com - on July 24, 2016
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