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Israel Export and International Cooperation Institute chairman Ramzi Gabai has called on exporters to reduce their exposure to foreign trade risk. "Exporters to Europe must act very cautiously. I am not saying don’t export, but thing should be done wisely," he told "Globes" yesterday.
"We're definitely scared by what we are seeing in Europe," Gabai said. "When there are reports of credit downgrades for Belgium and Hungary, there is something to worry about. It's no longer just Greece and Spain. It's scarier, because if we don’t prepare a proper response for each problem, we'll crash together with Europe, and Israeli exports will take a battering."
An analysis by Export Institute chief economist Shauli Katznelson in May 2010 warned that the absence of effective measures to solve the economic crisis in Greece could jeopardize the Eurozone, which would inevitably affect Israel.
Nevertheless, Israeli exports to the EU rose to 32% of total exports in January-September 2011 from 30% in the corresponding months of 2010, amounting to $11 billion. "This figure should not be taken for granted. It reflects many years of hard work and investment in Europe as an export target. Israeli exporters have been able to establish themselves there," said Gabai. "However, in view of the severe crisis in Europe, we advise them to continue investing in this market, but at the same time, to establish themselves in alternative, more stable markets."
Despite fears and forecasts of a European economic catastrophe, the Export Institute does not intend to revise its export forecast for 2012, reiterating its already bleak forecast of just 3% export growth next year.
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