Doing Quite Nicely, Thank You

Despite the war in Lebanon, rocket attacks and the mullahs’ existential threats, Israel seems to be doing quite nicely:

From today’s New York Times:

…despite the political turmoil and spasms of violence, Israel, it seems, has figured out how to keep its economy charging forward.

It was the country’s third straight year of strong growth, with the economy expanding nearly 5 percent. The stock market has been hitting record highs; unemployment is at a 10-year low. Israel’s central bank is lowering interest rates to 4.5 percent on Jan. 1, putting them well below rates in the United States, an almost unprecedented development. The Israeli shekel is trading at 4.2 to the dollar, its strongest level in five years.

Further, Warren E. Buffett, the billionaire investor, paid $4 billion for an Israeli company, and Donald Trump is developing a 70-story luxury residential tower on the outskirts of Tel Aviv.

“Israelis look at the economy, and they’ve essentially been through these disturbances in the past, and they know the economy is pretty robust and it tends to come back,” said Stanley Fischer, the governor of the Bank of Israel. “Things that happen here have a smaller impact on markets than I think they would abroad.”

While the Israeli economy has been thriving, the Palestinian economy has moved in the opposite direction, contracting by an estimated 10 to 15 percent this year, according to the Palestine Monetary Authority.

For Israel, the business that best illustrates the economy’s resilience this year is the company Mr. Buffett bought, Iscar Metalworking Company, a global leader in the manufacture of precision metal-cutting tools.

In May, Mr. Buffet bought 80 percent of the company, which has its headquarters on an isolated hilltop in northern Israel that offers a panoramic view of the nearby border with Lebanon.

Barely two months later, a cross-border raid by Hezbollah guerrillas ignited 34 days of fighting that pushed Israeli troops into Lebanon and drew heavy rocket barrages against northern Israel.

One rocket slammed into the Tefen Industrial Park, where Iscar is situated, causing minor damage to a building belonging to another company. Many more rockets crashed nearby during the weeks of war.

Many Iscar workers moved their families away from the border region, but the company maintained production, with only occasional slowdowns.

“It took us a brief time to adjust, but we didn’t miss a single shipment,” said Eitan Wertheimer, Iscar’s chairman. “For our customers around the world, there was no war.”

The northern city of Haifa came under almost daily rocket attacks, and ships stopped entering Haifa’s port, the country’s largest. Some exporters shipped their goods by air at much higher expense in order to meet deadlines.

The Tel Aviv Stock Exchange, which has been setting records throughout the year, seemingly shrugged off the war; it was slightly higher at the end of the conflict in August than before it started in July.

At the beginning of the year, Israel’s economy was forecast to grow at around 5.5 percent, and will come in at about 4.8 percent, according to Mr. Fischer, who attributed the dip to the war.

The Palestinian economy, meanwhile, has been devastated. During the peace talks of the 1990s, the Israelis and Palestinians increased cooperation, and by 2000, both sides were growing rapidly and nearly 150,000 Palestinians entered Israel daily. Most were workers who accounted for a large slice of the Palestinian economy.

…The Palestinian per capita gross domestic product, which was about $1,800 annually at the beginning of the uprising, plummeted to $1,200 last year and continues to fall.

For Israelis, per capita gross domestic product has risen over the last six years from a little over $15,000 a year to around $18,000, according to government figures.

And how are they doing in Hezbollahstan?

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