Foreign trade: exchange rate and slowdown effects
Foreign trade, 2006-August 2008
Foreign trade should be experiencing some major changes at present, firstly as a result of exchange rate developments – the strengthening of the shekel against most major currencies – and secondly, as a result of the global slowdown together with parallel initial signs of a slowdown in Israel.
The strengthening of the shekel makes Israeli exports less competitive abroad, wh
Despite these expectations, the graph shows the major components of both exports and imports – industrial exports and raw material imports – not experiencing any signs of decline or slower growth in 2008. Does this mean that there are no exchange rate and slowdown effects at work?
To answer this question, we have to delve deeper into recent data on exports and imports. Firstly, regarding exports, the trend rate of growth of industrial exports has slowed somewhat during 2008 – to 1.6% in August, compared to an average 2.5% monthly in the final quarter of 2007 – but st
In the case of imports, the evidence regarding the influence of the two effects – particularly the slowdown effect – is clearer. It is true that raw material imports are st
Investment goods (
Even if the exchange rate and slowdown effects on foreign trade have been fairly limited up to now in 2008, they could well become more evident in the months ahead.
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