A sharp drop in Israeli exports of chemicals in the first half of the year caused the country’s overall merchandise exports to drop 6%, compared to the second half of 2014, the quasi-governmental Israel Export Institute reported yesterday.
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Another factor in the decline was lower exports to Turkey and China, two of Israel’s key markets despite the prolonged strain in diplomatic ties with Turkey.
Excluding the chemicals sector, however, exports measured in dollars were up 1.5% in the first half of this year over the second half of 2014, the institute said.
Exports to China — not counting chemicals, which were down due to lower farm-product prices that discouraged purchases of Israel’s agrochemicals — rose 10% from a year earlier, to $1 billion.
Exports to Turkey plunged 34%, to $960 million, in the first half of 2015, mainly due to a 25% drop in chemicals exports.
Flagging export growth has been a major concern to policy-makers. The Bank of Israel is under pressure to take action to weaken the shekel against the trade-weighted basket of currencies that reflects the impact of exchange rates on Israeli price competitiveness in world markets.
Exports have been so weak that domestic consumer spending has overtaken them as the main driver of the economy. But Ramzi Gabbay, the chairman of the Export Institute, said he wasn’t concerned by the figures for now.
“I’m not worried but exports are weak, and because they are the only way to bring industrial and economic growth, since the local market is too small, we have to ensure that they keep growing,” he said.
Gabbay attributed the drop in chemicals exports to the sharp drop in global oil prices since the summer of 2014, a factor Israel can do nothing about, as well as a prolonged strike last winter and spring at Israel Chemicals, the country’s biggest chemicals producer. The strike was settled in May, and yesterday the company said production was returning to prestrike levels.
Meanwhile, exports to India, an emerging market for Israel, shot up 43% in the first half of 2015 from a year earlier, to $640 million. Israel is selling more defense-related products to India but also a host of other high-tech and other products, vaulting the country into eighth place among Israeli export markets, the institute said.
Exports to the United States, which remains Israel’s biggest country market, rose 6% to $5.5 billion, mainly due to pharmaceuticals, which make up about a third of Israeli sales to the country.
Russia continued to be a problem market for Israeli companies, with exports down 29% to $380 million due to the collapse of the ruble and the country’s slide into recession. Most of the decline was for farm products, Israel’s principal export to Russia.