Success: Foreign Investments Shrinking
29 July, 2002
In yet another blow to the Isr**li economy, foreign investors withdrew
a net $152 million from Isr**l in June 2002, according to the monthly
report by the central Bank of Isr**l. Although the bank did not
specify the reason for the drop, economists said it was a result
of the unstable political situation caused by the deepening Isr**li-Palestinian
conflict, the Jerusalem Post reported.
Isr**ls atrocities and war crimes in the West Bank refugee
camp of Jenin, and recently in Gaza have drawn worldwide condemnation
and several calls for boycotting Isr**l as a terror state.
The bank report mentioned that in June 2002, foreign resident investments
amounted to $152 million of profit-taking, mostly withdrawals from
deposits, following an ongoing period of decreasing deposits which
started in early 2000 and increased through April of this year,
when it became a redemption trend.
Despite a net rise in investments in the private sector of $362
million, bank account withdrawals and the sale of government bonds
of more than half a billion dollars canceled them out. Foreigners
invested $1.06 billion in the first half compared to $4.4 billion
in all of 2001 and a record $11.3 billion in 2000.
Isr**li investments overseas dropped in June by $31 million. Isr**lis
repatriated $191 million as a result of the sale of bonds worth
$493 million and investments in stocks and companies worth $302
Individual investors sold $40 million worth of foreign currency,
while companies began selling after the second increase of 2 percentage
points at the end of the month after a 1.5 percentage point increase
at the beginning of the month.
A sharp fall in the foreign residents investment was witnessed
as investments reached the microscopic sum of $31 million in Isr**l
in Q2 2002. This is compared to $1.025 billion in the first quarter
of the year and $4.368 billion in 2001, most of which was invested
during the first half of the year.
The withdrawal of foreign investments marks a new drop for the
already failing Isr**li economy, with inflation, tourism crisis
and unemployment presenting greater problems.
Isr**l's cost of living index rose a sharp 1.3 percentage points
in June, pushing the inflation rate to 6.3% since the start of the
year, the official statistics bureau announced Monday, July 29.
It warned that at the current rate, inflation could reach nine
percent for the year, more than double the treasury's target of
The rise in prices was largely due to the devaluation of the shekel,
which has slumped more than 20% against the dollar this year amid
the almost two-year Palestinian Intifada against Isr**li occupation.
By contrast, Isr**l had zero inflation for the whole of 2000, and
2.7 percent in 2001.
Another report by the central Bank of Isr**l said that about half
of Isr**ls potential work force of 4.8 million aged 15 to
64 did not work and only 255,000 of them were actively searching
for work in the first quarter of the year. While many developed
countries have made employment reforms, Isr**l has taken no action,
said the report.