The big picture in Israel for October 2018

Israel is finally emerging from the summer and fall holiday season and is kicking into full gear for the remainder of 2018. Due to a blip in the way the Hebrew and Civil calendar lined up business and news was a bit slow for the months of August (when everyone was on vacation) and September (where there were only 9 full work days due to the holidays).

Here is the big picture. The Israeli economy and political system may be due for a makeover.

On the political front, the winter session of the Knesset opened this week, and there are several bills coming up for a vote that may threaten the future of Prime Minister Netanyahu’s coalition government. The 3 big issues that may lead to the government’s collapse have nothing to do with the US, Palestinians, or the wider middle east conflict. They all are religion / state issues such as: conversion to Judaism, surrogacy rights for same-sex couples, and the big one mandatory military service for the ultra-orthodox.

As for the economy, the current BOI (Bank of Israel) governor, Dr. Karnit Flug has decided to step down after her 5-year term came to an end. Last week, a total unknown to the business world in Israel was tapped for the job, an American-Israeli professor of finance named Amir Yaron. Considering that Yaron has not lived in Israel for 20 years and has no management or central banking experience there are many question marks surrounding his nomination. In the past the selection process for a BOI governor was badly managed, and many feel that Netanyahu simply went out of his way to pick someone with no baggage or ties to the business or political world. Yaron has been called “a big gamble” by local market players. The BOI has kept interest rates at 0.10% since early 2015, but some feel that the time has come to step into line with the US and start raising rates at a gradual pace. This will certainly have an effect on the housing market (where prices have doubled in the past decade) as well as on the economy in general.

I’m looking forward to hearing from you via Twitter, Linked In, email, or Facebook about any questions or needs related to Israel. Feel free to get in touch, even if we haven’t spoken in a while.