010 was the year in which Israeli industry recovered from the global crisis.
Industrial production, which fell 6% in 2009, rose by 7.8% in 2010. The Central Bureau of Statistics reported that in Q1 2011 the trend of improvement in this sector continued, with a rise of 8.8% in annualized terms, compared with the corresponding quarter last year. Industrial production comprises one fifth of business production and totaled NIS 591 billion in 2010.
Growth in industry was uniform throughout 2011. In the first half there was rapid growth of 17.8%, which the Bank of Israel said was from global trade expansion and exceptional growth in chemicals and oil exports. In the second half, chemicals and oil export activities were less intensive and fell 4.3% in industrial product but the other industrial activities rose at a unified rate throughout 2010.
Taking into account seasonal changes, growth in industrial production in Q1 2011 grew 5.2% from Q1 2010. The highest rate of industrial production growth in seasonally adjusted terms was in mixed traditional industries, which grew 9.7% in the quarter. Sales revenue in the local market grew 3.6% over 2010 and export revenue in fixed prices grew 5.4% over the corresponding period.
Israel's industrial sector is currently facing a range of risks and opportunities. The expectation of growth in developed markets alongside rising demand in the domestic market and improvement in the tax environment are a good opportunity to develop and expand activities in the sector. However, the sector must cope with the harm to export competitiveness caused by the continuing appreciation of the shekel exchange rate alongside the economic slowdown in the developed world, which mainly affects exports of Israeli goods. The rise in price of global raw materials also weighs heavily on the sector.