January-February :
An analysis of industrial exports published last week by the economic division of the Manufacturers Association indicated that erosion of export profitability resumed in the first quarter of 2005.
The analysis pointed out that the profitability erosion can be attributed to a 2.5% increase in cost of production per export unit index. The analysis pointed out that after five consecutive quarters of growth, in January-February 2005 the monthly average of high-tech exports in real terms fell by 6.7% to $1.6 billion.
Industrial exports in this period, excluding diamonds, were down 2% to $3.8 billion. In January-February Industrial exports in general, excluding diamonds, fell after rising by 5%, in the fourth quarter of 2004.
The fall in exports can, according to Manufacturers Association head Shraga Brosh, be attributed to both a slowdown in the growth of global trade in general and in the US economy in particular, and damage to export profitability caused by the continued shekel appreciation against the dollar, higher wage costs, a further worsening in trading terms.
Brosh emphasized that 76% of Israel’s exports are dollar-denominated. Manufacturers Association president and Israel Export and International Cooperation Institute chairman Shraga Brosh noted that fall in high-tech exports (aviation equipment ; electronic components and computers; communications, control, drugs, monitoring) extended to all high-tech sectors, except electronic components, in which exports were unchanged. Exports of communications equipment, monitoring and medical equipment was down 11.5%, exports of aviation equipment dropped 17%, and exports of drugs were 4% down.
