Israel's Economy--How Badly Does Israel Need Annapolis To Work?

The short answer--not very. Despite everything that is going on around Israel that would seem to be sapping her morale, the economy is booming:

Last year's botched war in Lebanon, the escalating conflict with Islamist militants in the Gaza Strip, the threat of Iran's nuclear programme and the weakness of an unpopular and fractious government at home - nothing has so far managed to throw the economy off its high-speed track.

The country's TA-25 index of leading shares touched record highs last week, and is now up more than a third since the start of the year. Economic growth is forecast to reach 5.2 per cent this year, fuelled by rising consumer spending, buoyant corporate investment and strong exports. Unemployment has fallen steadily, and now stands at just 7.8 per cent - down from almost 11 per cent four years ago.

In a radical break with the past, Israel today runs a surplus both in its current account and budget.

The irony is that in the current economic situation Israel finds herself, though peace is good for tourism, Israel does not seem to be as reliant on the good wishes of the surrounding Arab countries, nor even on cheap Palestinian labor:

While previous peace efforts were accompanied by offers to link the Israeli economy with its neighbours, economists today argue that regional integration would be of limited value to the country.

Israel is also no longer dependent on the Palestinian territories as a source of cheap labour. The country's building sites and orange groves are today filled with workers from Asia and eastern Europe.

Now if Israel could only become less reliant on the US.

Technorati Tag: Israel.