Alma Lasers Deal Lifts Q2 Foreign Investment in Israel

Current account surplus up sixfold from last year.

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.

Eyal Toueg