the israeli market 2018 review & 2019 economic outlook summary and... · 53 hashalom rd. tel:...

Dun and Bradstreet (Israel) Ltd. |[email protected] | www.dbisrael.co.il | .03-7330330טל

The Israeli Market

2018 Review

& 2019 Economic Outlook

Dun & Bradstreet

Economic Health Index

This report may not be reproduced, in whole or in part, in any form. This report is delivered to you by Dun & Bradstreet

(Israel) Ltd (Dun & Bradstreet), and is only intended for your personal use to assist you in your business decisions. D&B

does not warrant the accuracy of the information in the report and is not responsible for any loss or damage caused to the

company or its representatives as result of the data gathering process and its delivery. This product enjoys copyright

protection and any reproduction and \ or unauthorized use constitutes as copyright infringement. Dun & Bradstreet (Israel)

Ltd © 2018

53 Hashalom Rd. Tel: 03-7330330 Fax: .7330340-03

Givatayim 5345433 www.dbisrael.co.il [email protected]

1. The Global Economy

During 2018, the G20 countries registered growth in their GDP, although growth was

only modest for most of them. However, worldwide growth is no longer the most important

global economic parameter – the geopolitical changes among the superpowers in recent years

has distanced them from the globalization principle, and they are now focused on local

economy stability and growth. Global growth for 2018 was driven much more from investments

and expansion, as opposed to previous years, where the growth mainly came from real estate

value increases and higher priced goods.

China, which accounts for 15% of worldwide products, underwent a considerable

slowdown in its growth rate, due to a huge increase in its debt. The low pricing of

manufactured goods over the past year reduced revenues, and the “trade war” between China

and the United States increased the prices of Chinese products to the American market,

softening their demand. The full application of American customs duty on Chinese products,

is expected to reduce American demand, and directly reduce China growth by 0.4%. Duty

increases might also have an indirect effect, if China lowers its prices to remain competitive in

the US market.

We believe that the strengthening of the labor markets in developed countries will lead

to an increase in wages, stimulating private consumption and local economic expansion. The

fiscal policy of the United States Administration over the past two years, including tax reforms,

imposition of higher customs duty, and increased Governmental expenditures, contributed to

the acceleration of the American economy and the protection of the American industry against

competition. As a result, the USA's share of global growth reached 20% and is expected to

continue increasing over the coming years.

In 2018, the American Federal Reserve raised interest rates three times, from 2% to 2.5%,

thanks to good macro data in the labor market and an increasing trend in the inflation levels.

However, a large part of the inflation increase was due to a rise in energy prices, which

decreased considerably during the second half of 2018. Therefore, inflation levels are still

expected to be low during 2019, and we estimate that the number of interest rate increases

by the American Federal Reserve will slow in 2019.

During Q4/2018, the world capital markets experienced a reduction trend. According to

the prevailing opinion, the trend was attributed to monetary reduction worldwide, along with

http://www.dbisrael.co.il/

mailto:[email protected]



the “trade wars” developing between the economic blocs. However, we believe these reasons

do not explain the drops in the capital markets, since monetary reduction processes were

already priced in the markets. In our opinion, the decrease in the capital markets was driven

by the rise in uncertainty levels, and automated trade. However, we believe this is only a

temporary situation, and in 2019 capital markets will start showing positive growth.

These are fascinating times for the world economy. We are undergoing a transition

from globalization-based growth to de-globalization-based growth. Although this trend

is primarily coming from the United States, other economic blocs are being forced to

comply with this new world order. The de-globalization of the large economic blocs is

designed to reduce their interdependence in the long term, but it also increases the risk of

geopolitical deterioration. Despite raising geopolitical instability, the USA's status is still firm

relative to the other superpowers, due to the strength of the American economy, its

indisputable control of the world economy, dominating US dollar, influence in capital markets,

huge technology companies, and its powerful globally distributed military force. These factors

will cause a redesign of global growth engines for the coming years. Global growth will need

to come from investments in infrastructures, increases in local production, real estate

commerce, and increased investments in the military and Homeland Security.





2. The Israeli Economy

The Israeli economy reached a considerable achievement this year, when S&P granted

to Israel the AA- rating, its highest ever. Prime Minister Benjamin Netanyahu hailed the

rating upgrade as “a reflection of the strength of the Israeli economy.” The rating's rise is due

to constant governmental policy that strives to reduce public debt, maintaining a low budget

deficit, and budgetary discipline. In addition, Israel’s GDP's growth rate is high compared to

developed countries, and the unemployment percentage fell to a record low. S&P estimates

that Israel’s responsible budgetary conduct will continue, and they do not see any substantial

risk that might undermine the positive growth direction of its economy. Nevertheless, there are

several parameters that might slow down the annual growth rate, and we will elaborate on this

topic later on.

The slowdown in the residential real estate market continues for the second

consecutive year. Over the last two and a half years, Israel has experienced two residential

real estate markets: the free housing market and the "Price for Apartment Dwellers" housing

program market. The current government has been intervening in the housing market in an

unprecedented manner in order to decrease housing prices. However, since the start of the

"Price for Apartment Dwellers" housing program, the housing price index actually increased

by 4.3%. The question is why…. why would a governmental economic program, designed to

decrease prices, actually cause price increases? The answer is that the government has been

acting to reduce demand at the housing market, relying on the assumption that if the demand

is down, market prices will necessarily fall. But that did not happen; the apartment marketing

rate plummeted, yet the prices increased. Housing market health is vital to the economy; we

estimate that the real estate market was responsible, directly and indirectly, for 1.2% of the

annual growth, i.e., it is one of the most significant growth engines at present. A significant

slowdown in the real estate market would affect many lines of business in the economy, from

service providers in construction projects to furniture, kitchen and electrical appliances

suppliers.

Recently, the inventory of apartments under construction has in fact undergone a reduction

trend, that is, a slower construction rate, and construction works are mainly limited to high

demand areas, such as the center of the country, or to urban renewal projects.

The Bank of Israel's interest is still very low, despite a minor increase of 0.1%. The low

interest contributes to further expansion of the credit market, increased investment in fixed





assets, and increases in consumer spending. The labor market continues to strengthen,

resulting in manpower shortages in all sectors of the economy, and many businesses are

having trouble finding and placing new employees. On the plus side, these factors result in

salary increases, which in turn stimulates consumer spending, which in turn positively impacts

the local economy. We believe this trend will continue into 2019. As for household expenses,

except for limited increases in housing, no significant changes occurred at the expenses level;

thus, disposable income increased.

The accrued yield of businesses continued to grow during the first 10 months of 2018, but at

a lower rate compared with the prior three years. The increase is mainly due to the rise in

consumer spending. Even though spending was tempered by a slowdown and higher prices

in the housing market, this was not enough to lower good and services prices, so the CPI did

increase.





Graph 1: Accrued yield at the economy and inflation

* Source: Central Bureau of Statistics and Dun & Bradstreet's processing

The expansion of the commercial and services lines of business continues to improve the

strength of the labor market. We estimate 3,900,000 persons were employed during 2018, an

increase by 50,000 over 2017, and the unemployment percentage is at a record low.

Moreover, we are at a state of frictional unemployment, in which the vacant positions are at a

constantly increasing trend, and it is more difficult to find and hire new employees. Salaries

have risen an average of NIS 1,300 over the past 3 years, and we believe this trend will

continue into 2019.

95.0

100.0

105.0

110.0

115.0

120.0

125.0

130.0

135.0

Jan

uar

y-1

3

Mar

ch-1

3

May

-13

July

-13

Sep

tem

ber

-13

No

vem

ber

-13

Jan

uar

y-1

4

Mar

ch-1

4

May

-14

July

-14

Sep

tem

ber

-14

No

vem

ber

-14

Jan

uar

y-1

5

Mar

ch-1

5

May

-15

July

-15

Sep

tem

ber

-15

No

vem

ber

-15

Jan

uar

y-1

6

Mar

ch-1

6

May

-16

July

-16

Sep

tem

ber

-16

No

vem

ber

-16

Jan

uar

y-1

7

Mar

ch-1

7

May

-17

July

-17

Sep

tem

ber

-17

No

vem

ber

-17

Jan

uar

y-1

8

Mar

ch-1

8

May

-18

July

-18

Sep

tem

ber

-18





2.1 Residential Real Estate

Over the past two and a half years, we have seen the formation of two residential real estate

markets: the free housing market and the government's housing project market. The current

government has been intervening in an unprecedented way to reduce housing prices.

However, since the start of the "Price for Apartment Dwellers" housing program, the housing

price index actually rose by 4.3%. The question is: why would a governmental economic

program designed to decrease prices, actually cause price increases? The answer is that the

government has been acting to reduce demand at the housing market, relying on the

assumption that if demand is down, the market prices will necessarily fall. But that did not

happen. The market responded to the reduction in demand by reducing the number of offered

apartments, and limiting the apartments under construction to high demand areas, such as the

center of the country or urban renewal projects, which both led to higher housing costs.





Graph 2: Housing starts, housing completions, and inventory of housing construction in

process


The decrease in housing starts is starting to take a toll on economic growth. The figures

published for Q3/2018 show the annual growth rate slowed from 3.2% to 2.3%, and the

slowdown is partially attributable to the slowdown of investments in residential construction.

In 2016 and 2017, the real estate market was directly and indirectly responsible for 1.2% of

the annual growth, i.e., it is one of the most significant economic growth engines, so a

significant slowdown needs to be avoided

40,000

50,000

60,000

70,000

80,000

90,000

100,000

110,000

120,000

130,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

Q1

-20

10

Q2

-20

10

Q3

-20

10

Q4

-20

10

Q1

-20

11

Q2

-20

11

Q3

-20

11

Q4

-20

11

Q1

-20

12

Q2

-20

12

Q3

-20

12

Q4

-20

12

Q1

-20

13

Q2

-20

13

Q3

-20

13

Q4

-20

13

Q1

-20

14

Q2

-20

14

Q3

-20

14

Q4

-20

14

Q1

-20

15

Q2

-20

15

Q3

-20

15

Q4

-20

15

Q1

-20

16

Q2

-20

16

Q3

-20

16

Q4

-20

16

Q1

-20

17

Q2

-20

17

Q3

-20

17

Q4

-20

17

Q1

-20

18

Q2

-20

18





Graph 3: Investments in construction and investments


When analyzing the inventory of apartments available for sale and the number of months

apartments are for sale, we see a decreasing trend, which means apartments are generally

selling more quickly, despite their higher prices. The government's premise that contractors

who have significant apartment inventory will reduce their prices, did not yet materialize.

59,89164,479

85,203 82,398 75,826 74,690 70,490 66,349

57,115 49,922

43,075 39,858 36,176 35,658

42,217 38683

54,354 49,833

44,717 45,223 48,188 43,309

36,246

31,348 29,030 29,790

29,471 27,762

8.6% 8.5%8.7% 8.8%

9.7%9.8%

10.6%10.7%

11.3%

10.8%

11.3% 11.3%

11.8%

11.3%

7.5%

8.0%

8.5%

9.0%

9.5%

10.0%

10.5%

11.0%

11.5%

12.0%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000





Graph 4: New apartment inventory for sale and offer months by sale rates


The slowdown in housing starts, since 2017, effects the financial stability of the contractors.

As we have estimated at Dun & Bradstreet, starting on Q2/2018, the morality payment

deficiency among contractors. The housing starts trend influences the payment failures at a

delay of one to two quarters, thus the slowdown in housing starts increased the risk level of

the contractors whereas the increase in housing starts reduces the risk level of the contractors.

The decrease in housing starts exerts price pressure on the contractors obtaining the works,

affecting their profitability. Also, the longer the marketing duration, the more the contractors'

cash flow is likely to be harmed, thus their working capital needs increases but their access to

financing resources is low. In addition to the decrease in housing starts, the contractors have

to contend with other regulatory requirements such as appointing foremen in each construction

site, fines on safety offenses and other costs to ensure the workers' safety.

The contractor bears at present most of the risks of the projects, whereas his profitability is

low and his uncertainty level is high, which shall not necessarily be the case. The current

activity of an execution contractor is not complicated: he shall buy materials, carry out works,

submit bills and pay to suppliers and employees. We estimate that based on all the data shown

14.0

15.0

16.0

17.0

18.0

19.0

20.0

24,000

24,500

25,000

25,500

26,000

26,500





here, we might conclude that in order to dramatically reduce their risk, the execution

contractors need much more certainty from all the involved in the project, mainly the State

authorities.

We examined also the activity of urban renewal contractors, especially since the share of

urban renewal out of all housing starts has been constantly increasing, and in 2018 it reached

almost 10% of the housing starts, thus becoming a significant economic line, with a turnover

of NIS 8.5 bn. per year. The projects underway at present amount to 1,784. In said urban

renewal projects operate at present 419 execution contractors, but 15% of them are at a very

high risk. About 25% of the contractors in urban renewal, the risk level increased in the last

six months and in 15% of the projects underway, a contractor was swapped at least once.

Those figures reflect severe problems of uncertainty in the framework of the projects. One

example for this uncertainty is the date of obtaining the permit for the building's population

(connection to water, electricity and phone services), that might significantly delay the project

and is considered a burden for the contractor, since he cannot complete the project and

receive the remaining payment.





Graph 5: The relation between contractors number that underwent difficulties for housing

starts

* Source: Dun & Bradstreet

Over the past two years, we see the number of credit days has been considerably extended,

due to the continuous decrease in the execution contractors' access to bank financing and the

increase in relying on credit from suppliers. This situation harms the contractors' ability to

survive. We estimate that this trend will continue in 2019, due to the decrease in housing starts

and extension of the payment period duration.

177

144153

291

177

102

193

260

123126

146150142

150

122

160

177

324

299

11228

9,290

10,879

11,212

11,968

14,118 13,876

14,126

13,475 13,553

12,997 13,249

13,047

14,318

11,825 11,818

10,969

12,846

8000

9000

10000

11000

12000

13000

14000

15000

0

50

100

150

200

250

300

350

Q1

/20

14

Q2

/20

14

Q3

/20

14

Q4

/20

14

Q1

/20

15

Q2

/20

15

Q3

/20

15

Q4

/20

15

Q1

/20

16

Q2

/20

16

Q3

/20

16

Q4

/20

16

Q1

/20

17

Q2

/20

17

Q3

/20

17

Q4

/20

17

Q1

/20

18

Q2

/20

18

Q3

/20

18





Graph 6: Credit days in the construction line

*Source: Dun & Bradstreet

The next government will need to shift their focus from limiting housing demand, to

increasing the number of available apartments. That might help them achieve their

target of reducing housing costs, while at the same time stimulating the growth of this

significant economic segment, which enjoys an annual turnover of NIS 100 bn.

80

78

77

79 78

78

79

77 77

78 79

80

83

82

83

92 92

89

75

77

79

81

83

85

87

89

91

93

95

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

אירש

אי מ

י





2.2 Developments and Activities of the Business Sector

At the end of 2018, 590,000 businesses operated in the Israel economy, of which 49%

employ workers. In 2018, 10,000 businesses and 50,000 positions were added to the

economy.

2018 2017 2016 2015

590,500 580,500 0010,75 9,30055 Number of businesses

active at the economy

55,000 56,700 55,300 53,200 Businesses opened

45,000 42,300 43,500 42,500 Businesses closed

10,000 14,400 11,800 10,700 Net business addition

50,000 85,000 95,770 89,900 Number of added

positions

%0.3 increase %.350 decrease %0.9 increase %1.5 increase Change in the risk level

at the economy

%7.70 %7.4 %7.75 %7.70 Probability of financial

deficiency (PD) at the

economy

93 90 93 92 Average credit days

30 32 29 27 Average slow payment

depth

Coffeehouses

and restaurants

Coffeehouses

and restaurants

Coffeehouses

and restaurants

Coffeehouses

and restaurants

The riskiest line

Pharmaceuticals Pharmaceuticals Pharmaceuticals Pharmaceuticals The most safest line


2018 was good to the Israeli economy in macro-economic terms, according to Dun &

Bradstreet. 55,000 businesses opened in 2018, although lower than the record achieved

in 2017, and 45,000 business closed. The net increase in active businesses was only 2%,

but it did set a record.

The substantial quantity of businesses opened in 2018, reflects the high local demand

level. The increase in the number of closed businesses reflects the slowdown in

residential real estate, and the drop in retail sales due to competition with online and





foreign purchases. We estimate that 45,000 businesses will close in 2019, and the net

number of active businesses in the economy will increase by 9,000.

In 2018, we witnessed a 0.3% increase in the probability of financial deficiency in the

economy, from 7.4% in 2017 to 7.7% in 2018. We estimate that the financial deficiency

will rise to 7.75% in 2019. Later on in this survey, we will show the distribution of industry

risk and trends in the various lines of the economy.

Graph 7: Opening and closing of businesses and probability of financial deficit at the

economy

Number of businesses


7.20%

7.30%

7.40%

7.50%

7.60%

7.70%

7.80%

7.90%

30,000

35,000

40,000

45,000

50,000

55,000

60,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 E2019

PD





2.3 Changes in the risk level of selected lines

The substantial changes in the risk level in 2018 were most evident in construction, building

management companies, fashion stores, coffeehouses and restaurants, with e-commerce

competition adding to retails sales pressure. This trend is expected to continue over the

coming years.





Graph 8: Changes in risk level of selected economy lines





-4.9%

-4.5%

-2.4%

-1.8%

-1.6%

-1.5%

-0.1%

0.0%

0.1%

0.3%

0.4%

0.5%

0.5%

0.7%

0.8%

0.8%

0.8%

0.8%

0.9%

1.1%

1.1%

1.2%

1.3%

1.3%

1.3%

1.3%

1.4%

1.5%

1.6%

1.6%

1.7%

2.0%

2.1%

2.5%

2.5%

2.6%

2.6%

2.7%

2.7%

2.8%

3.4%

5.1%

5.6%

5.8%

5.9%

7.3%

-6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

Transport and storage services

Hairdressing and beauty parlors

Pharmaceutical industry

Transport services

Trade in fuel

Engineering and architecture

Chemical industry

Insurance services

Software houses

Flower stores

Cosmetic industry

Agriculture

Foodstuff import and trade

Stationery and office supplies

Electrical and electronic appliances…

Pharmacies

Food industry

Business consultancy

Garages

Hotels & B&B

Furniture stores

Communication equipment

Metal industry

Plastic and rubber industry

Medical equipment

Hardware stores

Electronical components industry

Advertising and public relations

Toy stores

Communication

Jewellery and goldsmith stores

Nurseries

Printing and publishing industry

Textile industry

Travel agencies

Leasing

Furniture industry

Paper and cardboard industry

Food retailing

Optical stores

Industrial laundry

Computers and peripherals

Coffeehouses and restaurants

Fashion and clothing stores

Building management companies

Construction






2.4 Closed Businesses

In 2018, 45,000 businesses were closed, compared with 42,300 during 2017. An analysis of

closed businesses shows that almost half were small services providers, which is reasonable

given that small services providers account for 60% of all businesses in the economy. In

general, the average risk level in services is lower than in commercial and some industrial

sectors. Of the businesses that closed, 68% did not employ any workers, 25% employed 1-

4 workers, and 7% employed 5 or more workers.

The three events that most influenced business closings are the slowdown in residential

housing starts, the substantial and continuous increase in e-commerce and foreign

purchases, and the low foreign currency rates compared to the NIS. These factors will

continue to influence business closings into 2019:

Graph 9: Rate of closing of businesses out of all the active businesses at the same line






40% of the businesses that operated in 2018 have been active less than 5 years; 22% were

active less than two years. Most businesses that closed within their first two years of

operation were from retail stores, coffeehouses, buffets and restaurants.

Graph 10: Distribution of the seniority of businesses closed in 2018

0.7

%2.5

%

2.5

%

2.8

%

3.5

%

4.0

%

4.4

%

4.6

%

4.7

%

4.8

%

4.9

%

5.6

%

6.0

%

6.1

%

6.5

%

6.5

%7.7

%

7.8

%

8.0

%

8.0

%

8.3

%

8.5

%

8.7

%

8.9

%

9.1

%

9.3

%

9.5

%

9.6

%

10

.5%

10

.7%

10

.7%

11

.0%

11

.3%

11

.3%

11

.8%

11

.8%

11

.8%

12

.0%

12

.6%

12

.6%

12

.7%

13

.1%

13

.3%

16

.0%

17

.7%

PH

AR

MA

CE

UT

ICA

L I

ND

US

TR

Y

FO

OD

IN

DU

ST

RY

INS

UR

AN

CE

SE

RV

ICE

S

CH

EM

ICA

L I

ND

US

TR

Y

HA

IRD

RE

SS

ING

AN

D B

EA

UT

Y …

PA

PE

R A

ND

CA

RD

BO

AR

D …

BU

ILD

ING

MA

NA

GE

ME

NT

…

ME

TA

L I

ND

US

TR

Y

EL

EC

TR

ON

ICA

L C

OM

PO

NE

NT

S …

FO

OD

ST

UF

F I

MP

OR

T A

ND

TR

AD

E

JEW

EL

LE

RY

AN

D G

OL

DS

MIT

H …

BU

SIN

ES

S C

ON

SU

LT

AN

CY

NU

RS

ER

IES

EN

GIN

EE

RIN

G A

ND

…

GA

RA

GE

S

HO

TE

LS

AN

D G

UE

ST

HO

US

ES

AG

RIC

UL

TU

RE

PL

AS

TIC

AN

D R

UB

BE

R I

ND

US

TR

Y

CO

MM

UN

ICA

TIO

N E

QU

IPM

EN

T

FL

OW

ER

ST

OR

ES

PH

AR

MA

CIE

S

OP

TIC

AL

ST

OR

ES

SO

FT

WA

RE

HO

US

ES

ST

AT

ION

ER

Y A

ND

OF

FIC

E …

TR

AN

SP

OR

T S

ER

VIC

ES

HA

RD

WA

RE

ST

OR

ES

IND

US

TR

IAL

LA

UN

DR

Y

CO

SM

ET

IC I

ND

US

TR

Y

AD

VE

RT

ISIN

G A

ND

PU

BL

IC …

ME

DIC

AL

EQ

UIP

ME

NT

TR

AV

EL

AG

EN

CIE

S

CO

NS

TR

UC

TIO

N

CO

MP

UT

ER

S A

ND

PE

RIP

HE

RA

LS

FO

OD

RE

TA

ILIN

G

FU

RN

ITU

RE

IN

DU

ST

RY

FA

SH

ION

AN

D C

LO

TH

ING

ST

OR

ES

PR

INT

ING

AN

D P

UB

LIS

HIN

G …

TR

AN

SP

OR

T A

ND

ST

OR

AG

E …

TR

AD

E I

N F

UE

L

TO

Y S

TO

RE

S

FU

RN

ITU

RE

ST

OR

ES

CE

LL

UL

AR

ST

OR

ES

TE

XT

ILE

IN

DU

ST

RY

EL

EC

TR

ICA

L A

ND

EL

EC

TR

ON

IC …

CO

FF

EE

HO

US

ES

AN

D …

9.4

0%

12

.60

%

7.5

0%

5.8

1%

5.0

4%

5.7

1%

5.8

1%

4.8

5%

3.8

6%

3.5

7%

3.6

5%

3.0

2%

3.0

1%

2.8

3%

2.1

1%

2.2

3%

1.6

8%

1.8

3%

1.8

0%

1.3

8%

1 2 3 4 5 6 7 8 9 1 0 11 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0






The number of receiverships continued to increase in 2018, but the rate was more moderate

compared with previous years. In 2018, 20,464 receivership procedures were started, a 2.9%

increase over the 19,908 procedures started during 2017. Most of those procedures were due

to debts caused from business insolvency.





Graph 11: Receiverships processes started


2.5 Morality Payment

In 2018, the average credit days in the market was stable, with an average of 92 credit days.

The credit days' stability is positive, due to the increase in credit days at the last years, mainly

due to the businesses' low access to financing. In the last two years, the access of small

businesses to financing considerably increased, enabling the stability of average credits in

the economy. As we estimated last year, the Morality Payment Law, that was implemented in

H2/2017, did not reduce the average credit days in the economy. We estimate that the Total

credit amount of suppliers in Israel is approximately NIS 450 bn. The logistic procurement of

the governmental ministries is estimated at approximately NIS 25 bn., whereas 85% of the

orders are at sums lower that NIS 50,000 but their total sum accounts for only 3% of the total

logistic procurement of the governmental ministries. The procurement at the local authorities

is estimated at approximately NIS 40 bn., part of which is designed for infrastructure

development. We estimate that the State's share at the suppliers' total credit amount accounts

for 10% of the total suppliers' credit in the economy, therefore the influence of the Morality

Payment Law is low.

87

6

1,2

10

1,9

89

2,4

43

3,7

34

6,1

04

8,1

48

10

,35

8

11

,25

3

13

,23

4

15

26

2

16

16

3

19

90

8

20

46

4

2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 11 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8





Graph 12: Development of credit days


3. Forecast for 2019

In 2019, the businesses economy will be influenced by several substantial events, including

the elections for the 21st Knesset (the Israeli parliament), the Eurovision Song Contest to be

held in Tel Aviv, the continuing slowdown in housing starts, further increases in Israelis

moving abroad, incoming tourism to Israel, and further growth in e-commerce. The economy

is expected to continue showing GDP growth of about 3.5%, due to increases in private

consumption, services and investments, and exports. The business lines expected to grow

the most are business services, sectors influenced by incoming and outgoing tourism, and

commercial lines that are not exposed to e-commerce competition.

93

70

75

80

85

90

95

100

Jan

uar

y-1

4

Mar

ch-1

4

May

-14

July

-14

Sep

tem

ber

-14

No

vem

ber

-14

Jan

uar

y-1

5

Mar

ch-1

5

May

-15

July

-15

Sep

tem

ber

-15

No

vem

ber

-15

Jan

uar

y-1

6

Mar

ch-1

6

May

-16

July

-16

Sep

tem

ber

-16

No

vem

ber

-16

Jan

uar

y-1

7

Mar

ch-1

7

May

-17

July

-17

Sep

tem

ber

-17

No

vem

ber

-17

Jan

uar

y-1

8

Mar

ch-1

8

May

-18

July

-18

Sep

tem

ber

-18

No

vem

ber

-18



the israeli market 2018 review & 2019 economic outlook summary and... · 53 hashalom rd. tel:...

Documents