Export of goods, including diamonds, are expected to sink 20% in the fourth quarter of 2008 compared to the same period last year, says Shaul Katzenelson, vice president of the Israel Export and International Cooperation Institute. But that shocking figure hides another drama. Katzenelson blames the sharp decrease in exports on the collapse of about 40 businesses in the diamond export industry, as well as the fall of raw material prices due to the global economic crisis. Excluding the diamond sector, industrial exports are expected to show a decrease of only about 5%.

Preliminary figures for the fourth quarter, which ends tomorrow, are based on data from October and November and initial trends and figures from December, which could still be adjusted.

"A true drama is unfolding in the diamond industry," Katzenelson says. Raw and polished diamond exports plunged by about 40% during September and October compared to 2007, reports the Central Bureau of Statistics.

On the other hand, exports to the Far East and Turkey increased in the fourth quarter. Exports to India alone have burgeoned some 50%, from $367 million to $557 million. Exports to Japan climbed 13% and to China by 9%.