Well, although I am thrilled about the first half of this headline, I am pretty tired about the second half. The title is from an article on Arutz Sheva:
The 5.4% GDP jump is a slightly lower rate than in the two previous quarters, but higher than government forecasts. The Central Bureau of Statistics further reported this week that business product rose by 6.1% in the first quarter of this year, compared with 7.6% and 7.3% in last year’s 4th and 3rd quarters, respectively.
The results negate the pessimistic forecasts of 4.3% GDP growth by the Ministry of Finance and 3.2% by the Bank of Israel.
Great news for Israel. When most of the world is going down, we are going up. Though as these worldwide recessions tend to start in the US and pick up steam in Europe before arriving in Israel, these numbers wont last forever.
In fact, the shekel continues to strengthen against the euro and particularly the dollar. The dollar traded briefly at less than 3.3 shekels this morning, lower than it has been in almost 11 and a half years. The euro exchange rate now stands at 5.24 shekels, compared with 5.53 two months ago.
The shekel is expected to continue to increase following Fischer’s announcement this evening (Monday) regarding the interest rate. Most analysts expect him to raise it, after having lowered it or kept it unchanged the past three months.
Well, isn’t that great for the shekel. Not so great though for those who have significant assets and/or income in US Dollars or Euros (and that includes lots of money coming into the US government, most exports from Israel, a good deal of venture capital investment as well as telecommuters like yours truly).
The dollar is now down versus the shekel over 20% in the last nine months, and over 30% since the beginning of 2006. Although it is great for Israel to have a such a strong currency, when it comes at the expense of the currencies of Israel’s biggest financial supporters and trading partners, too much can be a good thing. However, since the shekel became an internationally recognized currency, there is not much that anyone can do (though Fischer raising interest rates while the Fed keeps going down doesn’t help anything).