The severe financial crisis affecting Europe is taking its toll on Israeli exports. According to figures published Tuesday by the Israel Export Institute, exports to EU countries declined by 21 percent over July-August. The decline in the euro’s value against the dollar during the first half of 2012 explains part of the decrease in Israeli exports to EU countries.

In its report, the IEI wrote, "2012 is shaping up to be a difficult year for exports. On the back of the dire crisis in the EU, the slowdown in the global economy and the contraction in the volume of global trade, during the last two quarters, exports of goods from Israel recorded the steepest declines since the height of the global crisis. While in the second half of 2011 the growth trend halted, during the first half of 2012 exports declined by 5% in dollar terms — for the first time since 2008."

In line with the overall negative trend in exports in the first half of 2012, diamond exports fell by 23% in dollar terms compared with the same period of 2011. Industrial exports declined 4% in dollar terms and agricultural exports also decreased 4% in dollar terms. During the first half of 2012, exports of high-tech industries decreased 6% from the second half of 2011 and in fact have been steadily declining since the first half of 2011. Likewise, exports of pharmaceuticals fell 12% (after declining 5% in the second half of 2011) and exports of electronic components rose 8% (following a 6% decrease in the second half of 2011). Exports of communications, scientific-medical and control equipment (the core index of high-tech industries) declined 1% in the first half of 2012, a similar decline as in the second half of 2011.

Other industrial sectors saw a negative trend, overall, with downturns recorded in exports of chemicals, minerals, metals, rubber and plastic, textile and food. On the other hand, exports of machinery and electronic equipment increased. In contrast to the negative trend in the exports of goods, exports of services continue to grow owing to a significant increase in exports of software, research and development (according to international statistical definitions, these items are classified under services). Between January and June 2012, exports of services totaled $14 billion, rising 9% year-over-year. The growth in exports of services has offset the decrease in exports of goods (excluding diamonds), such that total exports of goods and services (excluding diamonds) has remained at a similar level as in the first half of 2011, pointing to stagnation in exports.

During the first half of 2012, exports to the EU decreased 4% from the first half of 2011, exports to Asia rose 14% year-over-year, primarily owing to the accelerated growth in the exports of components and minerals, exports to Latin America grew by 9% and exports to Africa increased 6% year-over year. While exports to the U.S. fell by a sharp 20%, this drop is accounted for by a sharp decrease in the exports of pharmaceuticals in the second half of 2011 (as a result of a change in Teva’s target markets). Excluding this sector, the picture is reversed and exports to the U.S. point to a 3% increase.

In contrast to Europe, the rise in exports to Brazil and Russia had a favorable effect. Exports to Brazil grew 31% year-over-year, totaling $325 million and exports to Russia rose 23% to $270 million. Another export market that has been growing at increasing rates is Nigeria — in the second quarter of 2012 exports to this country leaped 149% to a total of $122 million. The growth in exports to Egypt continued in the second quarter of 2012; during the quarter, exports to the country rose 34% to a total of $36 million. In the first half of 2012, exports of goods totaled $149 million, growing 198% year-over-year. Most of the increase is accounted for by the growth in the chemicals industry, which represented 66% of exports to Egypt during the period. Exports of chemicals soared more than 800% to $98 million.

The stagnation in exports in 2012 is the main contributory factor to the rise in unemployment, the IEI report stated. "Our calculations show that a 6% growth in exports is needed to prevent a rise in unemployment. A continued stagnation in exports until the end of 2012 will push up unemployment to 8% at the start of 2013," it said.