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Straight From The Jerusalem Boardroom #112, February 9, 2007

Yoram Ettinger

1. MORGAN STANLEY, Jan. 10, 2007: “Foreign capital flows to Israel surged from $3.2BN in 2002 to $11.6BN in 2005 and a record level of $23.4BN last year… The Shekel is fundamentally undervalued against the dollar and even more so against the euro… Despite geopolitical constraints and indeed the eruption of a guerilla war in Lebanon, the Israeli economy has continued to grow at a robust pace…Israel’s economy has the strength to withstand a global slowdown… The Bank of Israel has opted for monetary easing and lowered short-term interest rates even below those in the US…Consumer price inflation declined from 3.8% in April to minus 0.3% in November… Budget deficit [was reduced] from 5.4% of GDP in 2003 to 0.9% last year… The current account surplus is not just a cyclical phenomenon. Israel’s current account balance moved from a deficit of 0.5% of GDP in 2002 to a surplus of 2.9% in 2005 and about 6% [surplus] last year…” (Globes, Jan. 11, 2007).

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