Wednesday, July 13, 2011

Bethel Finances: Fuel prices send trade deficit soaring

www.bethelfinance.com

Israel's trade deficit rose 208% to $7.2 billion in the first half of 2011, from $2.3 billion in the first half of 2010, the Central Bureau of Statistics reported today. 80% of the trade deficit was due to imports of fuel, whose price rose sharply in the first half, and to falling exports. Israel's export/import ratio plummeted in the first half to 73.7% from 86.6% in the first half of last year.

The growth in the imports of goods continued in June. Imports of raw materials (excluding diamonds and fuel) rose by an annualized 16% in trend figures in April-June, and imports of investment goods (excluding ships and planes) rose by an annualized 34%. Imports of vehicles and machinery, which account for 72% of the imports of investment goods, rose by an annualized 79%.

Imports of consumer goods rose by an annualized 18% in April-June.

These imports reflect robust economic activity and strong domestic demand, albeit the growth rate has slowed somewhat. Particularly worrying is the slowdown in industrial exports, the growth engine of the economy, which fell by an annualized 1.5% in April-June, after rising by an annualized 18.9% in January-March. The growth in high-tech exports ground to a near complete halt in April-June, and exports by critical high-tech subsectors (such as electronic components) suffered double-digit declines. Exports of pharmaceuticals fell by over 12% ($100 million a month).

Exports of mixed high-tech exports fell for the second straight month in June, and mixed low technology exports fell for the first time in over a year.

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