High-tech exports from Israel have grown by just 4 percent in 2007 so far, compared to a growth rate of 20 percent in 2006. The figures are based on annual data consolidated by the Manufacturers' Association of Israel (MAI). According to the figures, 2007 high-tech export growth is similar to that of traditional industrial.
High-tech is responsible for 48 percent of all industrial exports, which totals about $32 billion annually. Director of the MAI's economics department Ruby Gimel said the reasons for the slowdown of high-tech exports are as yet unknown, but could be partially due to the weakening of the dollar. Nevertheless, high-tech exports growth rose by just 5 percent in 2005 as well.
The industrial sector in Israel is bracing itself for a slowdown or even a recession in the U.S. economy. Many industrialists are beginning to redirect exports to European and eastern Asian markets. The trend, which began after a long period of a weak dollar, has gained momentum in recent months. Some large industrialists are predicting that the sub-prime crisis in the U.S. will cause a considerable slowdown of the U.S. economy that will adversely affect Israeli exports to the U.S. as well.
The first signs of a slowdown in high-tech exports appeared two months ago, in a different report published by the association, according to which high tech now accounts for just 25 percent of all exports, down from 80 percent just three years ago.
Chairman of the Israel Export and International Cooperation Institute David Artzi said that the dropping dollar exchange rate has cost exporters an accumulated loss of about a billion shekels since the beginning of 2007. As a result, many industrialists are avoiding new business. According to institute data, hundreds of industrialists have announced that they have ceased exporting in the past few months.
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