Bank Hapoalim Executive Warns of Gradual Erosion of Israel's Economic Potential
Translated & summarized from Globes by baba
Ram Gab, Deputy CEO and CFO of Bank Hapoalim, warned that the main threat to Israel's economy is a gradual decline in growth potential and fiscal capacity, not an immediate crisis. He cited high defense spending and insufficient productivity as potential causes, urging the next government to manage these issues. Gab also cautioned investors against assuming future crises will be as easily overcome as past ones, highlighting the banking system's crucial role in national resilience.
The story in 5 lines · by baba
- Bank Hapoalim executive Ram Gab warned of a gradual erosion of Israel's economic growth potential and fiscal capacity.
- He identified prolonged high defense spending and insufficient productivity growth as key risks to the economy.
- Gab cautioned investors against complacency, suggesting they may underestimate future risks based on past recoveries.
- He emphasized the Israeli banking system's fundamental role in national resilience and the need for its stability.
- The bank announced a new trading offer for attendees under 35, with reduced commissions and waived fees.
Ram Gab, Deputy CEO and CFO of Bank Hapoalim, has cautioned that the most significant risk to Israel's economy in the coming years is not a sudden crisis, but a gradual erosion of its growth potential and fiscal capacity. Speaking at the Investment Generation Festival, Gab noted that while the Israeli economy has shown remarkable resilience since the start of the war, long-term economic processes pose the primary concern.
He explained that prolonged high defense spending, budget pressures, misallocated investments, or insufficient productivity growth could lead to this erosion. Gab stressed that the next government, regardless of its composition, must manage these factors carefully to preserve Israel's strong economy. He also highlighted that Israel entered the war with a low debt level and high household savings, enabling increased government spending and support for businesses and households. Significant market gains and exits also contributed to state revenues.
Gab also warned investors against complacency, suggesting that past rapid recoveries from market downturns might lead them to underestimate future risks. He stated that investors may be assuming future crises will resemble past ones, a potentially dangerous assumption. The key question, he added, is not just whether investors recognize risks, but whether they demand adequate risk premiums for exposure to them.
Regarding the Israeli banking system, Gab asserted its fundamental role in national resilience, emphasizing the importance of maintaining a stable, strong, and profitable banking sector. He cited the COVID-19 pandemic and the war's early stages as examples where local banks continued to provide credit when other financial institutions scaled back. He also addressed public criticism of bank profitability, attributing it to high interest rates, operational efficiencies, and expanded activities, noting that Bank Hapoalim's balance sheet doubled in the last decade while banking sector employment decreased by about 30%.
Additionally, Gab announced a new trading offer for conference attendees under 35, featuring a fixed NIS 5 commission for Israeli trades and $5 for foreign trades, along with two years of waived securities management fees and currency conversion fees. This initiative aligns with the bank's efforts to attract younger investors.
