Israel's Polished Exports Drop 19% in H1

(IDEX Online News) – The global economic weakness is hurting one of Israel's main economic sectors, the diamond trade. In the first half of the year, net polished diamond exports declined 18.9 percent to $3.264 billion.

The decline comes not just against global difficulties, but in-house issues as well. Diamond Controller Shmuel Mordechai allusively referred to them as internal sector problems. He is referring to a series of raids by tax authorities and police that resulted in the exposure of an internal bank that allegedly transferred large amounts of cash in and out of the country.

The investigation rocked the diamond exchange and caused an immediate slowdown in activities.

Not only exports and internal trade decelerated, so did imports. Israel imported $2.201 billion worth of polished diamonds in the January-June period, a 21.7 percent year-over-year decline.

The declines should also be viewed in another context. The first half of 2011 witnessed a spike in demand for polished diamonds, mainly by retailers in China and India. This led to an inflation in polished diamond prices.

This runaway trend lasted until late July 2011, and therefore year-over-year comparisons between the first half of 2011 and the first of 2012 are somewhat unfavorable.

Starting in August 2011, polished diamond prices have cooled and are currently relatively stable. Year-over-year comparisons of the second half of 2012 to the second half of 2011 will likely show a smaller disparity.

The U.S. continues to serve as Israel's main export market, with about 47 percent of Israel's exports heading to the U.S.

Some 29 percent of Israel's exports were destined to Hong Kong, 7 percent to Belgium, 6 percent to Switzerland and 2 percent to the UK.