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How Would Trump Affect Israel’s Economy?

Liran Sahar | Ynet News

Y

net spoke to senior Israeli econo-
mists and got various opinions on
how Donald Trump’s election to
the presidency could affect Israel’s economy.
“It would take a while before the world
can figure out what Trump’s policies are,
but it’s safe to assume that, in reality, he will
be much more level-headed than it seems,”
asserts Yaniv Hevron, the chief economist
of the Excellence investment house.
“It would be best to ignore the reactions
of the market in the coming days as much
as possible as the markets are simply wor-
ried by the uncertainty that Trump brings.
But we have to remember that Trump does
bring an economic policy with him in the
form of lowering taxes, increasing dispos-
able income and bringing jobs back to the
U.S.,” he adds.
When it comes to foreign trade, the U.S.
accounts for about 26 percent of Israel’s
exports. According to Hevron, investors
worldwide are mostly worried by Trump’s
plans to make the U.S. a more closed econ-

omy, which he says is going to
over the past year in the main
hurt the U.S.’ trading partners,
stock indexes were the result of
especially in light of global trade
a drop in pharmaceutical stocks,
slowing down in recent years.
which carry a significant weight
Despite that, Hevron says he
in domestic indexes.
doesn’t believe Israel will be
“Several sectors, particularly
greatly hurt by that.
the pharmaceutical, financial
Hevron also said the pres-
and energy markets, can now
ident-elect wants to increase
breathe easy because they would
interest rates. “Trump claims
have been negatively affected
that low interest rates inflate the Donald Trump
had Clinton won.”
asset bubble, and he believes
The chief economist of the
interest rates should have been
investment house Meitav Dash,
raised a long time ago,” he says.
Alex Zabezhinsky, addressed the repercus-
According to Rafi Gozlan, chief econo-
sions of the geopolitical changes expected
mist of the I.B.I. Investment House, “At
in the region, which could increase security
first, Trump’s election brings high levels of
tensions. For example, a change in the new
uncertainty as we’re not talking about an
American administration’s policy on the
experienced politician … Bad policy in the
Middle East could lead to reducing sup-
U.S. could send the entire world into reces-
port to friendly regimes and canceling the
sion.
nuclear agreement with Iran.
“The political uncertainty reduces the
“In such a situation, Israel’s economy
chance of changes in U.S. interest rates,
could suffer from a rise in defense costs
and even more so in Israel. In terms of the
and from the uncertainty, despite the new
Israeli stock markets, this is a relatively pos- president’s declared support of Israel,”
itive development as most of the declines
Zabezhinsky says.

The CEO of Ashra, the Israel Foreign
Trade Risks Insurance Corporation, Tzahi
Malah, says “Trump’s election is expected
to lead to the weakening of the dollar
compared to the shekel and other main
currencies in the world in the short term as
a result of the uncertainty in the financial
markets over the consequences of his elec-
tion.”
Malah points to several sectors expected
to benefit from Trump’s election. “His vic-
tory strengthens the pharmaceutical sector
as concerns over Clinton’s planned drug
prices reform have been lifted, which, of
course, helps the Israeli pharmaceutical
exporters. Israeli defense industries are also
expected to benefit, due to a foreseen rise in
defense budgets.
“The financial sector is also expected
to strengthen over concern that Trump
would enact an aggressive fiscal policy that
would lead to a rise in the deficit, which
will be funded by bonds, so there’s a fore-
cast of return rates rising in the long term,
which is very beneficial for the banking
system.”

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66 November 17 • 2016

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