The Israel Credit Insurance Company provides details of its forecast, and expects a difficult year for exporters to the United States.

ICIC - The Israel Credit Insurance Company - has a pessimistic forecast for Israeli exporters in 2008, especially to the United States, Italy and China.

For Israeli exporters, ICIC has for the first time published, in "Asakim", a forecast for countries to which Israeli exports exceed 1 billion dollars a year.

According to the CEO of ICIC, David Milgrom, the forecast includes an estimate of the expected rate of growth in the number of bankruptcies in the relevant countries, and an analysis of the sectors which are regarded as being relatively risky for Israeli exporters.

He said that this information, together with the macro-economic analysis included in the review, can assist the exporter in preparing for 2008, which is expected to be a far more complex and difficult year than the previous one.

The forecast is based on a comprehensive analysis prepared by Euler Hermes, the world's largest credit insurer, which recently acquired a one-third holding in ICIC.

According to the analysis and forecast for the United States, which is Israel's largest export destination (approximately 30% of all goods and services exports, which total approximately $70 billion) - in 2007, exports to the United States totaled some $18.9 billion; the number of bankruptcies in the U.S. is expected to increase, according to ICIC, by 10% in the coming year; the American economy will need to deal in 2008 with high energy prices and the real estate bubble.

A significant economic slowdown is expected, with a drop in private consumption and significant erosion in corporate profits, which will be manifested in about a 10% increase in bankruptcies. The sectors that are especially risky: financial services, vehicle industries, real estate and airlines.

China also does not look particularly promising this year, despite its huge potential for exporters - in 2007, Israel exported goods and services to China totaling approximately 1 billion dollars. ICIC expects an increase of 15% in the number of companies going bankrupt this year.

After five years of double-figure growth, 2008 could see China's growth becoming more moderate. Despite the slowdown in the world economy and in local consumption, growth is expected to remain high, at 9.8%. The forecast is highly risky, since the downturn in global demand could have much more impact. 

Exports to Britain in 2007 totaled approximately 2 billion dollars. The expected rate of increase of bankruptcies is  8%. "While in 2007 the British economy grew by 3%, a slowing of growth started in the third quarter, and, therefore, in 2008, growth of only 1.9% is expected. The financial crisis reduces private consumption in Britain, and has a negative effect not only on the financial sector but also on the services sector as a whole, this sector being a central growth engine in Britain."

The risky sectors are the press and communications, the vehicle industry, machine manufacturing, chemicals, transport services and financial services.

Exports to France totaled 1.3 billion dollars. The expected rate of growth in bankruptcies there in 2008 is 3%. "Growth in France is expected to be less than 2% in 2008 as well. In 2008, a further slowdown is expected, as a result of the expected negative effect on the French export sector, resulting from the strength of the euro and loss of competitiveness vis-a-vis the German economy. Private consumption and residential investments are expected to remain steady."

The sectors which are especially dangerous - food, drugs, the vehicle industry, communications and computer products and chemicals.