Israel's exports of technology services continue to grow sharply. The Central Bureau of Statistics reports that exports grew 3.3% in May in comparison with the previous month, and by 17.9% in comparison with May last year. The high-technology sector, which covers computing, telecommunications, cybersecurity, software, and so on, is an extremely strong growth engine, and represents 10% of Israel's GDP.
Exports of services (excluding foreign acquisitions of Israeli startup companies) totaled $5.3 billion in May, of which $3.6 billion is accounted for by technology companies.
According to Bank Leumi chief economist Dr. Gil Bufman, exports of technology services have not been significantly affected by the restrictions imposed because of the coronavirus pandemic, and have continued to grow. "Exports of high-technology services represented 67% of total services exports in May. The current level of technology services exports is 30% higher than the level before the pandemic, and total services exports are 15.4% higher."
Mizrahi Tefahot Bank chief strategist Modi Shafrir believes that the expansion of services exports will continue in the coming year, among other things thanks to the boom on Nasdaq, "which indicates positive sentiment towards technology companies," he says.
So far this year, the Nasdaq Composite Index has risen by more than 15%, and in the past twelve months it has risen by nearly 35%.
Among Israeli companies that are included in the index, some have risen steeply this year. Global-e Online (Nasdaq: GLBE), which was floated three months ago, has risen 173%; Kornit Digital (Nasdaq: KRNT) has risen by more than 60%; Nova Measuring Instruments (Nasdaq: NVMI) has risen 38%; Tower Semiconductor (Nasdaq: TSEM) has risen 30%; monday.com (Nasdaq: MNDY) has risen 23%; Wix.com (Nasdaq: WIX) has risen 18%, as has AudioCodes (Nasdaq: AUDC). On the other hand, Playtika (Nasdaq: PLTK) has fallen 29%, and SolarEdge Technologies (SEDG) has fallen 17%.
Shafrir says that the Ministry of Finance estimates that the rise in the Nasdaq Composite Index in 2021 will lead to extra tax revenues of about NIS 12 billion, thanks to the positive effect of the rise in the index on the local economy.
"The boom on world capital markets, particularly in technology stocks, has boosted the value of the local technology companies, encouraging foreign investment in them. These investments mainly take place in the form of share offerings, and they contributed substantially to the growth in state revenues in the first half of the year. For the sake of comparison, raising VAT by 1% would increase tax collection by NIS 5 billion in a year," Shafrir said.
Published by Globes, Israel business news - en.globes.co.il - on August 2, 2021
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