Investment Focus:  Israel

The Israeli economy is strong and growing rapidly. With 5.2% growth in 2005
and 5.1% in 2006, Israel enjoys a higher growth rate than most OECD
countries. Growth figures for the past 10 years indicate not only high growth
during most years, but also resilience in the face of challenge.

In 2001-2002 Israel’s economy faced a wide range of negative factors: a global
recession, a meltdown in the technology sector – previously a key driver of
economic growth – and a political-defense crisis. The Israeli economy proved to
be strong, emerging within two years from a down cycle.  High growth has been
mirrored by low budget deficits (less than 2% of GDP in 2005 and less than 1%
in 2006 ) and inflation rates which were reduced to near 0% in 2006.

With that background, there are nearly a dozen key factors that make
Israel so fertile for investment:
A highly educated workforce, a cadre of innovative managers and a growing
economy were characteristics that made Israel a global leader in start-up and VC
investment.  Similarly, among latter stage and non-technology businesses, the
number of potential high-return investments is significant.  Despite having
world-class, innovative products, the lack of capital, limited experience in
pursuing export oriented growth strategy and complicated shareholding
structures challenge many small- to mid-sized companies in Israel to maximize
shareholder value.
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4 Berkovich Street, Tel-Aviv 64238 Israel
Tel: 972 3 609 3525, Fax: 972 3 609 3530
1
Economic direction has been steady even in
the face of government changes.
2
Capital markets have seen major reforms.
3
Israel’s Central Bank is independent and has
strong leadership.
4
The Israeli economy is externally focused.
5
Foreign investors are increasingly focusing on
Israeli investment opportunities.  
6
A large number of Israeli companies are listed
internationally.
7
Israel has a pool of attractive companies with
high growth and significant performance
improvement potential.
8
A newly developed, non-auctioned private
equity market has emerged.
9
Free trade agreements benefit Israel.
10
Israel has experienced rapid growth as a
leading international research and
development center for many multinational
companies.
11
Israel is rich in human capital.