Look at the past from Israeli politics. Its economy is booming.

With even the most advanced economies buckling under the highest inflation rates in a century, anemic growth and currency devaluations, Israel appears to be irreparably dysfunctional as voters prepare to elect their fifth government in less than four years . Not a day goes by without reports of clashes in the West Bank, the recurring threat of Hamas rockets fired from Gaza, and the threat of a nuclear showdown with Iran.

Israel’s perennial headlines obscure a larger reality, which is that the Middle Eastern nation of nine million is an economic juggernaut. It has the fastest growth and one of the lowest inflation and unemployment rates. Additionally, the shekel is the world’s best-performing currency among the 31 actively traded and the only one to have strengthened against the dollar over the past decade.

Unlike any of the 34 advanced economies, Israel is poised to achieve 5.2% gross domestic product growth in 2022, 3.5% in 2023 and 3.5% in 2024, according to more than a dozen forecasts compiled by Bloomberg. With unemployment at 3.5% and inflation at 4.3% (about half the annual rate for the US and the European Union), Israel is proving to be the benchmark not only for stability, but also for innovation.

If anything has changed in the last 10 years, it is that corporate Israel has become diversified. None of the 630 companies based in Israel represent more than 10% of the market value. Technology has emerged as the No. 1 industry, including 107 companies that make up nearly 25% of the market. In 2012, Teva Pharmaceutical Industries dominated the index with a 24% weighting, followed by agricultural and chemical manufacturing group ICL with 10%. Today, health care and materials account for 11.2 percent, up from 43.1 percent, according to data compiled by Bloomberg.

From auto parts to medical equipment solutions to food, water and climate change, technology made in Israel is transforming the world’s largest industries. This innovation hub includes Mobileye Global Inc., the creator of vision-based driver assistance systems for 50 car manufacturers or 70% of the global market. Mobileye recently filed with the US Securities and Exchange Commission for an initial public offering that values ​​the Intel Inc unit. to 30 billion dollars. There’s also Nanox Imaging Ltd., which serves governments, hospitals and clinics with image analysis, online diagnostics and cloud-based billing services, while also developing a 3D medical imaging device. Innoviz Technologies Ltd., maker of light detection range (Lidar) sensors and perception software for autonomous driving. and Redefine Meat Ltd., the intimate animal-free food manufacturer that uses proprietary 3D printing and digital meat modeling to replicate the look, texture and taste of whole muscle meat.

The people behind these companies are typically not afraid to fail because they are designing solutions for undefined problems. When Amnon Shashua, a professor at the Hebrew University of Jerusalem, founded Mobileye in 1999, he was already thinking about advanced driver assistance systems (ADAS) that were initially met with skepticism. “The industry pushed us away,” he said in an interview in September at the company’s headquarters in Jerusalem. “We developed it and won in the value market.”

Mobileye, which was acquired by Intel in 2017 after an IPO three years earlier, topped the 75 members of the Solactive Autonomous & Electric Vehicles Index, with revenue growth of 43% in 2021 and sales gains of 30% in 2022 (projected to be 23 % next year), making it No. 1 in growth among Intel units, according to estimates of 13 analysts compiled by Bloomberg. Forecasts are bolstered by Mobileye’s growing market share and unique applications.

Half of all new cars last year, or 40 million vehicles, were equipped with ADAS, and Mobileye supplied 28 million, or 70 percent, Shashua said. The company has been able to expand its market share in part because Mobileye “is the only company that has built an entire high-definition global map that we’ve called REM, or Road Experience Management,” allowing autonomous vehicles to be deployed in new locations almost instantaneously. he said.

Nanox is also beset by doubts about a business designed to reach the two-thirds of the world’s population — from Africa to South America to nursing homes in the US — without immediate access to medical imaging. Since the 2020 IPO, the stock has lost more than 50% of its value. But since mid-March, Nanox has outperformed the world, gaining 32%. Analyst forecasts compiled by Bloomberg call for a total return (earnings plus appreciation) of 219% over the next 12 months, more than any of the 10 largest medical imaging companies.

“We’re trying to move the world from predictive medicine to preventive medicine,” said Erez Meltzer, 65, who became Nanox’s chief executive in January. “You can’t be there if you’re not afraid of your own failure,” he said. “And sometimes, it’s like developing a cure for a disease that doesn’t exist.”

Innoviz, the auto parts maker based in east Tel Aviv and listed on the Nasdaq last year, reported a 144% rise in revenue in the first quarter and 78% in the second quarter, undercutting the gains reported by the 48 members of the Bloomberg Intelligence World Index. Spare parts for cars. The company’s not-so-secret sauce is Lidar technology that provides reliable navigation in changing environments. Japan Post said in July that it will digitize roads using Innoviz Lidar for digital maps. A month later, Volkswagen AG ordered $4 billion worth of Lidar from Innoviz, and analysts at Goldman Sachs Group Inc., Cantor Fitzgerald LP and Berenberg predict that Innoviz’s revenue will grow 288% in 2023 on average, and 374 % in 2024.

“Anything that’s robotic is going to need a Lidar,” Oren Buskila, head of research and development and co-founder of Innoviz, said in an interview in July. “We chose the automotive market because this is where we will see the most growth for Lidars,” he said. In 10 years, most new cars will have Lidar, Buskila added. “The automotive industry can change as we move to truly self-driving cars, not just self-driving cars, but they can actually take the responsibility of driving away from the driver and let them sleep or work on their laptop or read a book or whatever.”

At a point where climate change is everyone’s existential threat, sustainability is increasingly driving the agenda for corporate Israel. This is especially true for 2018 startup Redefine Meat, which created the first 3D printed plant-based steak. “If you single out one industry that contributes to the damage of this planet, meat is the biggest,” said co-founder and CEO Eshchar Ben-Shitrit during a July interview at the company’s Ness Ziona headquarters. “We think in the next 20 years, there will be a big meat company very similar to JBS or Tyson Foods that doesn’t need animals, and we think we have a good chance to be that company.” Redefine Meat products are found in more than 500 restaurants, butchers in Israel, Berlin, Amsterdam and London.

Polarized politics did not prevent successive short-lived governments from focusing on sustainability as a priority. “The most promising areas in terms of climate innovation are those related to alternative protein, so Redefine Meat is one of them,” Yuval Laster, the ministry’s senior deputy director of strategy and policy, said last month in Jerusalem. Protection of the Environment. “Water technology, food technology, agricultural technology are all part of what we see as climate innovation,” including “more than 600 startups in Israel already.”

So, even if the past is prologue and the next government fails due to lack of consensus, the economy shows no signs of convulsion. “The climate and innovation is bipartisan in Israel,” Laster said.

More from Bloomberg Opinion:

• Some Israelis fear Netanyahu more than Iran: Zev Chafets

• New Israeli-Palestinian conflict shows worse to come: Hussein Ibish

• Arab-Israeli summit masks stalled diplomacy: Bobby Ghosh

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Matthew A. Winkler, editor-in-chief of Bloomberg News, writes about the markets.

More stories like this are available at bloomberg.com/opinion

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