From the IsraTransfer Trading Desk
The shekel looked almost identical to last month's report until things changed last Thursday. The stable rates got shaken up when the US GDP forecast came in a lot weaker than expected. The market expectation was 8.5%, but the actual result came in at 6.5%. The economy has not been growing at the pace everyone believed, resulting in a drop in the dollar/shekel rate to 3.22 on Friday. This is the lowest we have seen the dollar since the middle of January.
The dollar movement moved the sterling and the euro down. The sterling is trading below 4.50 for the first time since February.
We can expect more turbulent times in the market over the coming month with the increase in covid cases in Israel, and looming predictions of another lockdown. While another lockdown is unlikely, the tourism industry will probably experience a hit with foreign tourists barred due to the Delta variant. We are expecting fluctuations in the rates as we approach the High Holidays.
The Budget Bind
It has been a while since the Israeli government passed a budget. A 2-year political stalemate left the country running on a pro-rated version of a base 2019 plan. The new proposal put forth by Finance Minister Avigdor Liberman is causing quite the stir with its numerous reforms. These changes include lowering the cost of living, promoting free-market competition, and cutting costs. Many of the reforms have been tried in the past but failed to pass due to fierce opposition. It is still unclear if this government will be more successful than its predecessors, and many believe it has a good shot.
The government needs to pass the budget to stay in power and avoid another election. The current coalition members are all over the political spectrum and disagree on many things. But one thing they have in common is the desire to keep their seats. Another election leaves them with an uncertain political future. To that end, they might overcome their differences and green light Liberman’s proposal.
So, what are these reforms that could dramatically impact the Israeli economy? One has to do with Kashrut. The Israeli Rabbinate has a monopoly on the country’s Kashrut, and the food industry must obtain its seal of approval. Religious Affairs Minister Matan Kahana strives to allow other competitors into the market, thereby creating competition in the world of Kashrut. With the Haredi parties in the opposition, many see the chance for change in this area.
Another contentious component relates to the agricultural sector. Israel’s overall approach to agriculture aims to keep the country self-sufficient in terms of food production. Its policies towards the sector stem from a fear of being subject to external boycotts, especially during times of war. It, therefore, implemented government-imposed quotas across a range of agricultural products to ensure local farming stays profitable. The new reform would open the economy up to imports from abroad. It also includes a package, including grants and tax breaks, to help farmers stay in business. Farmers were not impressed and have launched an intense campaign opposing Liberman’s proposal.
Israel’s Standards Institute ensures that all products must undergo safety checks and verification in Israel, even if they have already been certified abroad. Part of the new budget proposes to dissolve these heavy regulations making shopping cheaper for Israelis. It may also discourage consumers from shopping local brands, thereby hurting local industries.
Imposing a sugar tax, turning office spaces into housing units, reducing plasticware, and opening up banks to competition are a few more items on the table bound to anger some and please others. While these and the other reforms may improve the country’s economy in theory, we can be sure that the debates leading up to the budget’s vote will be anything be boring!
Let the Games Begin
This year’s Olympics are exciting for Israel. With 89 athletes competing in 15 different sports, this is the country’s largest delegation to date. This year Israel has its first-ever equestrian team, archer, and surfer. There will be many returning athletes in Judo, gymnastics, swimming, baseball, and more.
Follow Team Israel, a social media initiative founded by Shari Write-Pilo and David Wiseman connects Israeli athletes to their fans. The project began during the first lockdown as a way for local athletes to share their workouts. With the Olympic games in full force, Follow Team Israel’s Facebook page shares the personal stories and triumphs of Israeli athletes competing in Tokyo 2020.
So far, we have three wins! Sunday, artistic gymnast Artem Dolgopyat won Israel’s 2nd-ever Olympic gold medal. Dolgopyat made aliyah from the Ukraine when he was 12 years old. Now at age 24, he beat out tough competition and made Israel proud, collecting this year's third medal to the tune of HaTikvah. Avishag Semberg from Gedera was the first medal winner this year, taking home the bronze medal in womens -49kg taekwondo. On Saturday, the mixed judo team also won a bronze at the Tokyo games. There is still hope for more to come! The full schedule for Israel’s athletes can be found here.
Travel and Tourism News
We were looking forward to the return of tourism. Many Israeli businesses are hurting, people want to travel out of the country for summer vacations and be reunited with loved ones from abroad. Due to the delta-variant which the Pfizer vaccine is less effective against, the number of positive coronavirus cases has been steadily increasing. The government is taking measures to curb the rise, including limiting travel to and from Israel and reinstating the Green Pass. They are also considering tracking incomers from abroad.
More countries were added to Israel’s “red” list. United Kingdom, Georgia, Turkey, and Cyprus are considered “high risk” for travelers, and the Israeli government banned citizens from flying to those countries without special permission. Israeli’s wishing to return to Israel are subject to certain restrictions, including mandatory quarantine.
There is a bit of good news for travelers. Many foreigners recently traveling to Israel faced major challenges getting into the country. Entry permits, required for arrivals to Israel, were difficult to obtain. Embassies abroad were not providing them in time, leaving fretful relatives scrambling to local offices in efforts to acquire the documents.
On July 13, this process was made a whole lot easier with a new online system. Now, travelers can apply for entry permits online through an Israeli government website. The form should be submitted four weeks before departure to Israel since it can take time to process. In the meantime, only certain foreign citizens can apply for entry. These include individuals with a first-degree family member in Israel, students and yeshiva students, those wishing to attend a funeral, and foreign citizens married to an Israeli citizen or permanent resident.
To obtain a permit, applicants must provide a copy of their passport, vaccination or recovery certificate, and health insurance covering COVID. Some additional documents may be required depending on the reason for travel. Yad L’Olim’s Facebook page posts the latest updates and is a great resource for anyone looking to visit.
Here Come the Olim!
This month, a group of 160 French Olim arrived in Israel. In 2021 Israel saw a 137% jump in aliyah from France compared to the same time a year before. The eclectic group of immigrants included doctors, lawyers, teachers, engineers, media professionals, and children under 18.
Aliyah through Nefesh b'Nefesh is also on the rise. More than 18,000 North Americans have opened aliyah applications since March 2020. The organization expects 5,000 people to immigrate to Israel in 2021, a 42% increase on the annual average. Reasons for the uptick in aliyah include a reordering of priorities amid the pandemic experience, Israel's relative success in handling Covid-19, and the normalization of remote work and study.
With immigration on the rise, the launch of Nefesh b'Nefesh's new Aliyah Policy and Strategy Institute seems timely. The institute, headed by a former MK Michal Cotler-Wunsh will focus on creating long-term strategies and policy planning to assist Olim. Nefesh B’Nefesh has 20 years of data on immigrants from the 70,000 people it helped make Aliyah. The idea is to use this data to identify what policies would better the absorption of new immigrants.
The institute marks a change in the original way NBN assisted Olim. They used to concentrate on facilitating the Aliyah process from the UK and North America. The goal was to “lower any financial, professional, logistical and social hurdles that got in the way” of Aliyah. The new model aims to build on the original mission by strengthening the connection between Olim and the Israeli public. The hope is that this effort will serve to create a tighter bond between Israel and Diaspora Jewry.