Mizrahi Tefahot Bank (TASE: MZTF) deputy CEO and CFO Adi Shachaf presented to the Globes Investment Conference with a series of inherent advantages in the Israeli economy that allow it to demonstrate strength even in times of war. But he spoke negatively about the cost of living in Israel, and said “This is one of the issues that the state budget must address.”
“The economy’s balance of payments, the fact that the Israeli market is a net lender to the world, the advantage in the exchange rate and the foreign investments that continue to arrive have put the Israeli economy in excellent shape,” Shachaf said at the conference held at the Tel Aviv Stock Exchange.
“We have surpassed Germany in GDP per capita – Germany, which is an established and long-standing economic power. However, when you take into account the purchasing power of the Israeli consumer, then you discover our weak point. The Israeli economy has grown, even in the most aggressive years, but it is expensive here, and therefore the overall figure drops significantly by 25%, and this is an area where there is room for improvement.
“All this ‘good’ could have been much better,” Shachaf continued. “Because we are fighting with our weak hand, and if we did the right things in the state budget, it could have been better here: lowering the debt-to-GDP ratio from around 70% to around 60% while presenting an action plan on the subject, and presenting investment plans in the fields of energy, health, transport and education. We would like for them to invest more in these areas and the state’s commitment to addressing the cost of living, and we hope for the safe return of our soldiers and all the hostages.”
“Households in Israel are not leveraged”
Shachaf presented many figures indicating the resilience of the Israeli economy, even two years after the outbreak of the war and the expansion of the fighting in Gaza. The birth rate is the highest of OECD countries, with close to two children per woman, compared with an average of 1.5 in these countries. The unemployment rate is low compared to other countries, although this figure can change relatively quickly, and Israeli households are not leveraged.
“Contradicting what we tend to think, households in Israel are not leveraged, despite taking out mortgages – part of this is due to the fact that the mortgage rate relative to GDP is in a good place, despite 15 years of rising housing prices.”
On the subject of government debt, Shachaf noted the halt in issuing designated bonds, which was done at the right time and helped balance the natural increase in costs resulting from financing war expenses: “Also in the area of energy expenses, household electricity expenses are very low, certainly in comparison with European countries.”
Full disclosure: The Conference was in partnership with Phoenix Group and sponsored by Mizrahi Tefahot Bank, Keystone Fund, and Aura Investments.
Published by Globes, Israel business news – en.globes.co.il – on September 3, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
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