Country Trade Risk Index (ERI): 101.24
Country risk reference rating: Level 4 (4/9)
Country Risk Outlook: Stable
Economic and trade risks
Israel’s political risks are relatively small, and the country’s political order has remained stable for a long time. Israel’s economic structure is reasonable and stable. At present, the foreign debt burden is low and the fiscal balance and expenditure are in good condition. Israel welcomes foreign investment, has a generally good business environment, has clean and efficient politics, and has a sound legal system. Israel is a developed economy with stable economic performance as a whole. Affected by the financial crisis in recent years, foreign trade volume has declined, but the economic trend will remain stable in the future. The government has adopted appropriate policies in curbing inflation, promoting employment, controlling exchange rate fluctuations, and maintaining a balance of international payments. Israel’s international reserves are increasing year by year and its financial resources are strong, which plays a positive role in reducing its foreign debt repayment risks. Israel’s fiscal policy attaches great importance to increasing revenue and reducing expenditure, strives to control the fiscal deficit, and has performed well in maintaining a balanced fiscal balance. In 2012, Israel’s nominal GDP was US$241.05 billion, and per capita GDP was US$30,494; the real economic growth rate was 3.2%, and the inflation rate was 1.7%.
Bilateral trade and cooperation
China has become Israel’s largest trading partner in Asia and the third largest trading partner in the world. China’s main exports to Israel are mechanical and electrical products, textiles, clothing, footwear, ceramic products, etc. Israel’s exports to China are mainly high-tech products such as mechanical and electrical products, medical equipment, telecommunications, and some potash fertilizers. China is an important destination for Israel’s foreign investment. Its main investment projects are concentrated in high-tech, new energy, water technology, energy conservation and environmental protection, agricultural projects, biomedicine and other fields. In the past five years, the scale of Israeli venture capital funds has exceeded US$300 million, mainly investing in high-tech industries such as China’s modern agriculture and electronic information. It has played a strong role in promoting China’s industrial upgrading and transforming its economic growth model.
Business environment
Israel’s business environment is at a good level. Enterprise public financial information can be obtained through convenient means such as the Internet, investment protection is high, and credit is obtained conveniently and quickly. The Israeli government civil servants are efficient, have a high degree of integrity, are highly transparent in various laws and regulations, and insist on impartial enforcement of the law when handling commercial disputes. The Israeli government adopts an active and open policy towards foreign investment and has formulated relatively sound laws and regulations in attracting foreign investment. There are basically no restrictions on foreign investment in Israel except those related to military and national security. The Israeli tax system is transparent and efficient. The Israeli government has introduced various mechanisms to reduce corporate tax burdens to attract foreign investment. Depending on the location and business content of the enterprise, Israel adopts different tax policies and adopts preferential policies for the manufacturing and export processing industries. Overall, Israel’s business and investment environment is more suitable for foreign investors to engage in business cooperation.
Overall risk assessment
Generally speaking, Israel’s political arena is relatively stable, and the possibility of a regime crisis is extremely low. However, severe fragmentation in recent years has led to an unstable status of the ruling coalition. The Israeli government has taken appropriate economic policies. The overall economy is operating stably. Although it has been affected by the financial crisis in recent years, the mid-term recovery is relatively strong and the long-term trend will remain stable. In the absence of a large-scale external war, Israel’s foreign debt repayment risks will be at a low level. The Israeli government’s fiscal policy attaches great importance to increasing revenue and reducing expenditure, and strives to control the fiscal deficit. It has performed well in maintaining fiscal balance. However, high public debt will limit the formulation of fiscal policies that are too loose. The Israeli judicial system is recognized around the world for its integrity, transparency, and efficiency. Although it is lacking in contract enforcement capabilities, it is generally conducive to foreign investors’ business activities.
Based on the analysis and assessment of the current overall situation, Israel’s country trade risk index (ERI) is 101.24, the country risk reference rating is 4 (4/9), the country risk level is medium to low, and the country risk outlook is stable .
(Issuing agency: China Export and Credit Insurance Corporation)
