Dun & Bradstreet Israel warns of immense damage to industry, which will increase further, because of the shekel's appreciation against the dollar. This is liable to cause a signification slowdown in economic growth. Friday's shekel-dollar representative exchange rate was set at NIS 3.233/$.
On the basis of figures collated and companies' first quarter financial reports, Dun & Bradstreet Israel believes that many exporters to the dollar bloc are suffering from a sharp drop in profits. It added that the shekel-dollar exchange rate has fallen 16% since the beginning of the year, including 8.8% during the first quarter and that the second quarter is shaping up to be even worse.
Dun & Bradstreet Israel says that 70% of public electronics companies reported poorer results for the first quarter of 2008 compared with the corresponding quarter of last year. "The picture is even worse if we exclude electronics firms that produce for the domestic market, and which shouldn’t have been exposed to the shekel-dollar exchange rate," it said.
Dun & Bradstreet Israel notes that some companies might decide to reduce costly domestic production because of the shekel's appreciation and move to locations with lower production costs. This is liable to cause both a downturn in production and layoffs.
Published by Globes [online], Israel business news - www.globes-online.com - on June 2, 2008
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