The gauge remains unchanged from last year
The gauge indicating Jewish assets and resources has not been changed this year. This conclusion is based on a balance between positive indicators and trends that hint at possible difficulties in the future.
Israel is the primary generator of capital in the Jewish world, and it continues to present a strong economy. The low inflation rate, steady rise in the employment rate, and macroeconomic stability – combine to tell us this is true. Undoubtedly, a great many countries around the world would be happy to present economic conditions like Israel’s. Although the government’s deficit is higher than planned, it is still manageable relative to the scope of the Israeli economy.
Nonetheless, a long-term look at Israel’s economic future requires that we address the risks that lie ahead. Israel’s productivity level is low, as is the growth rate, compared with the levels of other OECD countries. The combination of productivity and population growth is what promotes economic growth, but a look at Israel’s economic situation minus the relatively narrow high-tech industry reveals signs of difficulty. Another cause for concern comes from the indices regarding the status of Israel’s education system. Both in the context of demography and education, it appears there is no relative increase in the relative size of the production sector. Similarly, an inefficient resource allocation system causes high prices for many products (which contributes to job security). Higher prices only highlight the gaps between Israeli sectors of disparate economic conditions.
Economists describe Israel’s economy as “open,” meaning that both exports and imports play a significant role in national income. Changes in the climate of the global economy on which Israel relies are also liable to indicate potential difficulties. Israel has flourished in a system whose natural tendency is to develop in the direction of free trade. An example of such a system can be seen in the free trade agreement signed with the United States in 1985, thanks to which Israeli products enjoy a tax exemption in the American marketplace. Israel has similar agreements with various countries around the world, but the principles of free trade on which Israel relies are under attack, particularly in the US.
If the free access Israel has to the American market is no longer the norm and becomes a matter of special treaties that require specific negotiations, Israeli product exports will likely suffer. If Israel’s international trade partners force Israel to open its doors to more competition, we can assume that the Israeli consumer would benefit, but this could also jeopardize employment, particular among workers in low-tech industries.
Jewish communities outside of Israel, including the large North American community, have been stable since its recovery from the economic downturn that began in 2008. JPPI continues with its efforts, as reported in last year’s assessment, to thoroughly understand the material condition of institutions that are vital to the existence of Jewish identity in the United States. The results of these efforts will be summarized in a separate report later in the year.