Israel is fighting the negative impact of a slowdown in global economic growth on its trade performance by exploring the potential of “less traditional markets” such as the Philippines.
In a roundtable discussion on Friday, Bank of Israel Governor Karnit Flug said his country’s general trade performance is linked with the global business cycle, given that its major trading partners are Europe and the United States, although its trade with Asia has been growing.
“Given the global economy, which is not doing too well in terms of growth, we are definitely affected,” she said.
Israel’s exports particularly to Europe have reflected the struggling economies in the region, Flug said.
The Middle Eastern economy is in a gradual process of diversifying its trade toward the less traditional markets in Asia, including the Philippines, the central bank governor said.
Flug stressed that Israel’s trade diversification is meant to counter the negative impact of recent global developments, particularly on its exports, which are about 40 percent the country’s gross domestic product.
“That is also partly why it is important for us to, sort of, ‘diversify’ into the more dynamic parts of the world,” she said.
Flug noted that there is an unutilized trade potential between the Philippines and Israel, particularly in the areas of knowledge, research and development, agriculture, and the high technology areas such as information and communications technology.
“Israel has technology, innovation-based activity to offer so it seems that there is substantial potential. Although right now the level of exports-imports with the Philippines is quite low, I am sure there is potential for growth,” she said.
Flug noted that 75 percent of Israel’s overall exports are focused on high technology industries, which include information technology, medical equipment and services.
“These are the main areas in which, I think, the potential for more trade and investments could be actually extended,” she said.
The latest available data showed that bilateral trade between the Philippines and Israel in 2013 posted a value of $177.12 million. Israel is the Philippines’ 38th biggest trading partner, 32nd export market and 40th import supplier.
Flug is among the delegates to the quarterly meeting of central bank governors from around the world, scheduled to take place in Manila this weekend.