Alma Lasers Deal Lifts Q2 Foreign Investment in Israel

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Net foreign investment in Israel jumped in the second quarter but the current account surplus shrank slightly from the quarter before, statistics released on Thursday show.

Israel ran a current account surplus of $1.79 billion for the second quarter, narrowing slightly from $1.87 billion in the first quarter as the merchandise trade deficit widened, the Central Bureau of Statistics reported Thursday.

Nevertheless, the current account – which takes into account trade and other transfers of money between Israel and abroad – widened nearly sixfold from a year earlier.

The second quarter also marked the fifth straight quarter in surplus since the current account briefly dipped into a deficit in the first quarter of 2012.

Meanwhile, net foreign investment was up sharply in the second quarter to $5.1 billion - its highest level in more than two years, and 4% up compared with the first quarter, the CBS said.

Portfolio investment – money put into shares and bonds traded in the stock market – shrunk to just $342 million, from $1.74 billion in the first quarter. But foreign direct investment jumped, to nearly $4.7 billion for the quarter, its highest quarterly level since the end of 2011.

Although Google’s $1 billion acquisitions of navigation app company Waze happened after the second quarter ended June 30, several major mergers and acquisitions deals occurred during the quarter - among them Shanghai Fosun Pharmaceutical’s $220 million purchase of Alma Lasers.

In the current account, Israel’s exports goods and services edged up 0.7% from the first quarter to $23.8 billion in the second. Imports of goods and services declined 0.9% to $ 22.1 billion. And while the merchandise trade deficit widened 3.8% to $1.84 billion, the services surplus widened 14.4% to $3.57 billion.

The so-called primary income account, which includes inflows and outflows of investment and wages, showed a $1.92 billion deficit for the second quarter, widening from a deficit of $1.62 billion in the first quarter. The secondary income account, which measures current transfers, showed a $1.98 billion surplus for the quarter, narrowing from $2.14 billion.

As of mid-year, Israel has a surplus of assets over liabilities abroad of $59.7 billion, compared to a $50.6 billion surplus 12 months earlier.

Google Israel headquarters. Contracts are negotiated in Israel, but signed in Ireland.Credit: Eyal Toueg

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