7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Education First Ranks MENA Countries for English Proficiency in Global Index
EF Education First released the ninth annual edition of its EF English Proficiency Index (EF EPI), analyzing data from 2.3 million non-native English speakers in 100 countries and regions, including Saudi Arabia, Egypt, the UAE and other Arab countries. The Netherlands topped this year’s index, placing Sweden, last year’s top-scorer, in the second position.
In the MENA region, Bahrain scored the highest. However, the region has continued to lag behind the other regions of the world. The index has also found that in the MENA region, young adults have a somewhat similar English proficiency level as adults over 40 years of age. This suggests that English instruction in the region’s schools has not been evolving over the years. The results have also shown a great convergence in the levels of proficiency among adults in the region, with only 9 scores separating Bahrain, MENA’s best achiever, from the weakest performing country, Libya.
The EF EPI is based on test scores from the EF Standard English Test (EF SET), the world’s first free standardized English test. The EF SET has been used worldwide by thousands of schools, companies, and governments for large-scale testing. EF Education First is an international education company that focuses on language, academics, and cultural experience. Founded in 1965, EF’s mission is “opening the world through education.” (EF Logo 12.11)
*REGIONAL:
7.2 UAE Cabinet Approves National Holidays for Public and Private Sector
The UAE cabinet has approved unified national holidays in the year 2019 and 2020 for public and private sectors on 31 October. All ministries and federal offices have been asked to abide with the approved holiday calendar for year 2019 and 2020. In March, the Cabinet had issued a decree to enforce the unification of holidays for employees in the public and private sectors in the country.
Remaining UAE Public Holidays for 2019:
- • The Prophet’s Birthday (November 9 – Saturday)
- • Commemoration Day: (1 December – Sunday)
- • National Day: (2-3 December – Monday, Tuesday)
Public Holidays 2020:
- • New Year: (1 January 2020)
- • Eid Al Fitr: (29 Ramadan – 3 Shawwal)
- • Arafat Day: (9 Dhu al Hijjah)
- • Eid Al Adha: (10-12 Dhu al Hijjah)
- • Hijri New Year: (23 August)
- • The Prophet’s Birthday (29 October)
- • Commemoration Day: (1 December)
- • National Day: (2-3 December)
The final calendar dates of some of these holidays is based on moon-sightings and will be confirmed closer to the date. (GN 31.100)
7.3 Morocco Maintains ‘Very Low’ Score in English Proficiency Index
Morocco ranked 76th in the 2019 English Proficiency Index (EF EPI), maintaining a “very low” score in the recent ranking. The index listed Morocco among the very low proficiency countries with a score of only 47.19. In 2018, Morocco scored 48.10, and the index listed it 60th out of 88 countries. Morocco maintained its position in the regional index, where it is ranked sixth behind Tunisia (fifth) and Ethiopia (fourth). South Africa, ranked sixth globally, tops the index in Africa, followed by Kenya (18th in the global ranking). The index ranked Algeria the 90th on the list.
This is particularly relevant to Morocco as senior Moroccan officials do not see English replacing French any time soon. Earlier this year, Morocco’s Minister of Education Said Amzazi said that French will remain the second language after Arabic in Moroccan schools. Languages in Morocco are one of the topical issues dividing public opinions. While some promote Arabic and English, others believe that French should continue to take the lead.
The Minister of Education urged Moroccan schools to implement the framework law 51.17 at the start of the academic year 2019-2020. Article 31 of the framework law calls for the teaching of scientific and technical subjects in middle and high schools in foreign languages (mainly French). (MWN 05.11)
8: ISRAEL LIFE SCIENCE NEWS
8.1 Else Nutrition Holdings Ushers in Next Generation of Clean Label Baby Nutrition
Else Nutrition Holdings announced that their all-natural, 100% plant-based formula is being produced using a clean production process, transforming two whole plants, without chemically-breaking them up into derivatives, nor using chemical extraction of oils. Namely, the formula is devoid of highly-processed ingredients, purified oil blends, chemical protein isolates or hydrolysates. Additionally, the production process occurs without the addition of free amino acids, and no use of corn syrup solids. The formula contains only 3 main ingredients (superfoods almonds and buckwheat, as well as tapioca) which comprise 97% of the formula.
Else Nutrition’s sustainable 100% plant-based, all-natural and organic baby formula is free of hormones, antibiotics, hexane, gluten, GMO and solvents. The company will be launching its toddler formula & nutritional drink in North American market in Q2/20, with plans to launch the infant formula in the coming years.
Tel Aviv’s Else Nutrition is a food and nutrition company focused on research, development, manufacturing, marketing, sale and/or license of innovative plant-based food and nutrition products to the infant, toddler, children and adult markets. Its revolutionary 100% plant-based non-soy alternative to dairy-based baby formula received the “Best Health and Diet Solutions” award in the Global Food Innovation Summit in Milan in May 2017. (ACCESSWIRE 31.10)
8.2 iCAN & Headquarters Partner to Bring Israeli Cannabis Innovations to the California Market
iCAN: Israel-Cannabis and Headquarters (HQ), a Los Angeles based product accelerator and cannabis license holder with distribution and manufacturing facilities, have formed a strategic partnership to identify the most innovative Israeli cannabis companies and products, and provide them with access to the California market, via distribution, sales and marketing support. iCAN has developed a world-class ecosystem of cannabis companies and is at the very center of all the amazing developments in the Israeli cannabis industry.
Tel Aviv’s iCAN: Israel-Cannabis is building the Global Cannabis Ecosystem. iCAN is committed to accelerate Israel’s CannaTechnology industry, capitalizing on Israeli innovation and a leading cannabis regulatory environment to bring premier products to market. iCAN is powered by CannaTech, the premier international cannabis summit held annually in Tel Aviv, and around the world. (iCAN 31.10)
8.3 Panaxia Completes a European Regulation Audit Towards EU-GMP Standard
Panaxia Israel announced that the audit of the regulatory body of the EU, which was conducted at the plant recently, was successfully completed. It is expected to shortly receive the EU standard (EU-GMP) to manufacture pharmaceutical cannabis products.
The EU-GMP standard is necessary in order to export medical cannabis products to most of the EU countries, including Germany, Poland, Italy, Denmark, Greece and more. Since these countries do not recognize the Israeli standard (IMC-GMP). It is impossible to market products manufactured in Israel in these countries, without complying with the European EU-GMP standard. The regulation requirements compel all plants and companies which manufacture, store, use, and manage drugs of any kind in Europe. It should be noted that there are a few medical cannabis companies around the world, estimated at less than 10, with extraction plants which comply with the rigorous European standard requirements.
Lod’s Panaxia Israel is part of the pharmaceutical group of the Segal family, operating for over four decades, and manufacturing over 600 different pharmaceutical products, which it distributes in over 30 countries. constitutes the Group’s cannabis division. In addition, the sister-division of North America manufactures over 60 pharmaceutical products based on medical cannabis, including sublingual tablets, oral tablets, oils, inhalers, and more, intended to treat conditions such as post-traumatic stress, cancer, chronic pains, epilepsy, anorexia, burns, and many other medical conditions. (Panaxia 31.10)
8.4 Vertical Field Recognized With NGBS Green Certification for Buildings in the USA
Vertical Field (VF) has been officially granted with the ICC 700 National Green Building Standard (NGBS) in the US by Home Innovation Research Labs. Home Innovation Research Labs is a full-service research, testing, and consulting firm determined to improve the quality, durability, affordability, and environmental performance of single-and-multifamily homes and home building products
Vertical Field has been operating since 2006 and conducting hundreds of projects around the globe implementing its vertical landscaping and farming solutions in the urban ecosystem, working with customers that range from big corporates to hotels, hospitals, schools and others. Vertical Field develops active vertical walls that improve air quality in indoor facilities, reduce temperature of buildings and UV blockage for outdoor. VF’s solutions combine the inherent genius of nature with advanced IoT systems, sophisticated sensors and cameras, and active the vertical landscaping.
Ramat HaShavim’s Vertical Field (VF) is a worldwide pioneer in the designing and building of modular, lush green vertical gardens and fields. Innovative and unique in their approach to creating living walls, we design our own system with VF’s state-of-the-art, cutting-edge technology. Vertical Field’s solutions are installed in residential, industrial, and public constructions in many countries around the globe, and the company expects to receive several other green building certifications in the near future. (Vertical Field 04.11)
8.5 Compugen Announces FDA Clearance of IND Application for COM902
Compugen announced that the U.S. Food and Drug Administration has cleared its investigational new drug (IND) application for COM902, its immuno-oncology therapeutic antibody targeting TIGIT in patients with advanced malignancies. Under this IND, the Company intends to initiate a Phase 1 clinical trial in patients with advanced malignancies for whom standard of care therapies are currently ineffective. Expected to begin in early 2020, the clinical trial is designed to evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics, and preliminary anti-tumor activity of COM902. The study is planned to be conducted at multiple centers in the United States and site selection activities are currently underway.
COM902, a high affinity, fully human antibody targeting TIGIT, was developed for combination treatment with COM701. Preclinical data demonstrate that TIGIT inhibition, either alone or in combination with other checkpoint inhibitors, can enhance T cell activation and increase anti-tumor immune responses. Compugen discovered TIGIT in 2009 leveraging its immune checkpoint computational discovery platform through which PVRIG was also discovered.
Holon’s Compugen is a clinical-stage therapeutic discovery and development company utilizing its broadly applicable, predictive computational discovery platforms to identify novel drug targets and develop first-in-class therapeutics in the field of cancer immunotherapy. The Company’s therapeutic pipeline consists of immuno-oncology programs against novel drug targets it has discovered computationally, including T cell immune checkpoints and additional early-stage immune-oncology programs focused largely on myeloid targets. (Compugen 04.11)
8.6 IMC Lists on Canadian Securities Exchange
Glil Yam-based IMC (International Medical Cannabis) has raised C$20.4 million on the Canadian Securities Exchange as IM Cannabis Corp., and will start to be traded on 5 November under the symbol IMCC. For the purposes of the offering, IMC was merged into a stock market shell listed on the Canadian Securities Exchange. IMC is one of the eight oldest growers in the Israeli cannabis market, and has been active for a decade. This year, the company received the approvals enabling it to grow cannabis under the new regulations following the cannabis reform in Israel.
In February, IMC’s farm, which is near the Gaza Strip border, had an area of 16 dunams (four acres). The company can expand it to as much as 200 dunams (50 acres). In August this year, IMC bought a distribution company in Germany, and started importing cannabis into Germany from another company overseas. The plan for the future is to export products from the Israeli farm to the German company, once exports of medical cannabis from Israel are approved. (IMC 04.11)
8.7 Hospitech Airway Management System Reduces Ventilation Complications in Lung Transplants
Following the AnapnoGuard airway management system’s FDA market clearance at the end of 2018, Hospitech Respiration announced that a new article was recently published by physicians from Mayo Clinic which describes the successful use of the AnapnoGuard system in postoperative management of lung transplant patients.
AnapnoGuard AG100s Control Unit and AnapnoGuard Endotracheal Tube Hospitech’s AnapnoGuard AG100s Control Unit serves as an integrated, multi-purpose airway management system, highly effective in protecting the lungs and tracheal tissues from infections and tissue injury. The AnapnoGuard Endotracheal Tube (AG ET Tube) provides an advanced solution to well-known complications related to prolonged mechanical ventilation, which prevents potential infections and injury of the trachea and vocal cords. AnapnoGuard AG100s Control Unit and AnapnoGuard Endotracheal Tube Hospitech’s AnapnoGuard AG100s Control Unit serves as an integrated, multi-purpose airway management system, highly effective in protecting the lungs and tracheal tissues from infections and tissue injury. The AnapnoGuard Endotracheal Tube (AG ET Tube) provides an advanced solution to well-known complications related to prolonged mechanical ventilation, which prevents potential infections and injury of the trachea and vocal cords.
The AnapnoGuard system (AG100s control unit and AG ETT) is a novel system which continuously monitors leaks around the endotracheal tube (ETT) cuff, automatically adjusts the cuff pressure to ensure sealing at minimal pressure, and evacuates subglottic secretions by simultaneous suction and rinsing.
Kfar Saba’s Hospitech Respiration is a medical device company focused on developing and marketing of advanced airway management solutions for mechanically ventilated patients. The Company utilizes extensive expertise and experience to improve patient safety and reduce complications of ventilated patients. The AnapnoGuard system is FDA 510(k) cleared and CE marked. (Hospitech Respiration 06.11)
8.8 Can-Fite Granted U.S. Patent for Piclidenoson in the Treatment of Osteoarthritis
Can-Fite BioPharma announced that the U.S. Patent and Trademark Office has issued to the Company Patent #10,265,337 titled “Use of A3 Adenosine Receptor Agonist in Osteoarthritis Treatment” for its drug candidate Piclidenoson for the treatment of osteoarthritis in mammals.
Can-Fite is evaluating potential partnerships with companies in the animal health pharmaceutical market that may in-license and develop Piclidenoson for the companion animal market, a substantial and rapidly growing global market. Current treatments for canine osteoarthritis include oral non-steroidal anti-inflammatory drugs (NSAIDs) which only treat symptoms and carry significant harmful side effects, and an injectable disease modifying osteoarthritis drug (DMOAD) that targets the progression of the disease. Piclidenoson, an oral drug that has a favorable safety profile in humans and in animal studies, offers a potentially safe and effective oral treatment for canine osteoarthritis.
Petah Tikva’s Can-Fite BioPharma is an advanced clinical stage drug development company with a platform technology that is designed to address multi-billion dollar markets in the treatment of cancer, inflammatory disease and sexual dysfunction. The company’s lead drug candidate, Piclidenoson, is currently in Phase III trials for rheumatoid arthritis and psoriasis. Can-Fite’s liver cancer drug, Namodenoson, recently completed a Phase II trial for hepatocellular carcinoma (HCC), the most common form of liver cancer, and is in a Phase II trial for the treatment of non-alcoholic steatohepatitis (NASH). (Can-Fite 11.11)
8.9 Hallura Closes Its $7 Million Financing Round
Hallura closed its Series A financing round of $7 million. The financing round was led by a group of US, Europe and Israel-based private investors; most of the investment comes from leading plastic surgeons and dermatologists. Hallura’s HA Dermal Fillers are based on proprietary technology developed by the company over the last two years. Unlike the 20-year-old technology used in currently available HA fillers which are based on using BDDE for cross-linking; Hallura developed a novel crosslinking technology answering the growing demand for natural and soft non-invasive aesthetic treatments. Hallura’s products are based on a radically different crosslinking mechanism which maintains and protects natural HA long chains. Hallura completed a full set of in-vivo animal studies of its products showing excellent safety and higher potential for skin lifting compared to the leading products in the market.
Yokneam’s Hallura brings a disruptive HA technology to the fast growing aesthetic injectables market using proprietary HA crosslinking technology. Hallura’s HA dermal fillers answer the growing demand for better, safer fillers with natural and soft aesthetic results with a wide range of aesthetic applications.
Alon MedTech Ventures incubator, based in Yokneam, is investing and partnering with outstanding entrepreneurs to transform innovative medical device ideas into successful companies. Alon Medtech invests in novel technologies and solutions that significantly improve the well-being and quality of life of humankind around the globe. (Hallura 11.11)
8.10 Foamix & Menlo Merger to Focus on Therapeutics for Dermatologic Indications
Foamix Pharmaceuticals and Menlo Therapeutics have signed a definitive merger agreement to create a combined biopharmaceutical company focused on the commercialization and development of therapeutics to serve patients in the dermatology space. The Boards of Directors of both Foamix and Menlo have unanimously approved the transaction. The combined company will have a diversified portfolio including an approved product and three late-stage product candidates focused on dermatologic indications.
Foamix recently received FDA approval for AMZEEQ (minocycline) topical foam, 4%, for the treatment of inflammatory lesions of non-nodular moderate-to-severe acne vulgaris in adults and pediatric patients 9 years of age and older. AMZEEQ is the first topical formulation of minocycline. Foamix is finalizing the implementation of the commercial infrastructure in preparation for a U.S. commercial launch anticipated in January 2020.
Foamix recently submitted a New Drug Application to the U.S. FDA for FMX103 (minocycline) topical foam, for the treatment of moderate-to-severe papulopustular rosacea. The FDA set a Prescription Drug User Fee Act action date of June 2020. If approved, FMX103 would be the first minocycline product available for rosacea patients. Foamix is also conducting a Phase II trial for FCD105, a topical combination foam of minocycline and adapalene, currently being evaluated for the treatment of moderate-to-severe acne vulgaris.
Rehovot’s Foamix is a specialty pharmaceutical company working to solve some of today’s most difficult therapeutic challenges in dermatology and beyond. With expertise in topical medicine innovation as a springboard, the Company is working to develop and commercialize solutions that were long thought impossible, including the world’s first topical minocycline, AMZEEQ. Foamix is a different type of specialty pharmaceutical company by design, driven to see the solutions, overcome barriers in all aspects of business, and reimagine what’s possible for conditions with high unmet needs. (Foamix 10.11)
9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 ŠKODA Optimizes Manufacturing Processes and Cuts Costs Using Seebo’s Solution
Seebo announced a new cooperation, with ŠKODA AUTO, the leading Czech car manufacturer. ŠKODA and Seebo have partnered in order to predict and prevent losses in ŠKODA’s engine production lines by using Seebo’s unique process-centric AI solution. The deployment of Seebo Predictive Quality will be carried out in ŠKODA’s automotive production lines, to optimize manufacturing processes and reduce production costs. Seebo Predictive Quality collects and analyzes data from production lines and automated inspection systems, providing production teams continuous actionable insights, to enable better decision making. Leveraging predictive analytics and automated root-cause analysis, Seebo ensures production efficiency is kept at its highest level.
Tel Aviv’s Seebo develops process-centric AI solutions, enabling manufacturers to predict and prevent process inefficiencies that damage production yield and quality. Leveraging predictive alerts and automatic root cause insights, Seebo drives continuous process improvement and manufacturing excellence. Seebo solutions are deployed worldwide, at manufacturing sites of multiple industries including, Automotive, Food & Beverage, Chemicals and others, to optimize manufacturing by increasing throughput, while continually improving quality. (Seebo 31.10)
9.2 Isay Chooses MySizeID Technology to Increase Customer Loyalty and Reduce Returns
My Size announced that Isay, a Danish brand sold in more than 500 physical stores and on different online platforms in Northern Europe, chose MySizeID to increase customer loyalty and reduce returns. As of 1 November, Isay customers across Northern Europe can be prompted to measure their correct size when shopping at Isay online after completing their body profile using the MySizeID application- a process that takes less than 5 minutes and is only done once. In less than 30 days Isay evaluated the MySize technology on 50 women. The proof of concept was carried out by the Isay team on tops & bottoms. The Isay team measured each woman manually and, in parallel, each woman using the MySizeID application. The findings showed that the MySizeID technology delivered a higher sizing accuracy.
Airport City’s My Size has developed a unique measurement technology based on sophisticated algorithms and cutting-edge technology with broad applications including the apparel, e-commerce, DIY, shipping and parcel delivery industries. This proprietary measurement technology is driven by several algorithms which are able to calculate and record measurements in a variety of novel ways. (My Size 31.10)
9.3 Magal Receives $2.4 Million in Perimeter Security Contracts for International Airports
Magal Security Systems has won contracts amounting to $2.4 million, supporting the critical perimeter security infrastructure of airports. Most of the awards were for two major international airports, but also includes products and services for several other airports globally. The majority of orders were for the maintenance related to previously purchased products and services from Magal.
These new contracts are a testament to Magal’s ability to execute, providing highly reliable products and quality services to their customers. These orders are also a demonstration of how their large existing customer base is a potential source of further orders down the road. The majority of these new orders were for ongoing perimeter security maintenance. Airport protection remains a key long-term growth vertical for Magal and they look forward to continuing the expansion and deepening the penetration of their customer base.
Yehud’s Magal is a leading international provider of solutions and products for physical and cyber security, as well as safety and site management. Since 1969, Magal has delivered tailor-made security solutions and turnkey projects to hundreds of satisfied customers in over 100 countries – under some of the most challenging conditions. (Magal Security 31.10)
9.4 Robotic Arm that Fits All Developed by Researchers at Ben-Gurion University
BGN Technologies, the technology transfer company of Ben-Gurion University of the Negev (BGU), introduced a novel technology allowing one end-effector to fit various targets. The invention, developed at the Department of Mechanical Engineering at BGU, allows for the design of non-dexterous graspers for a production robot that will enable the grasping of parts with different geometries, thus reducing the cost of production of the parts, while increasing versatility in the production lines. The invention relies on a proprietary search algorithm that defines available grasping areas in a set of parts that are used in a given production line, taking into account multiple parameters, such as the force required to hold the part firmly. The algorithm then defines a common set of grasping points for all objects in a given group, enabling the design of one robotic arm that will be able to handle all the parts.
Beer Sheva’s BGN Technologies is the technology company of Ben-Gurion University, Israel. The company brings technological innovations from the lab to the market and fosters research collaborations and entrepreneurship among researchers and students. To date, BGN Technologies has established over 100 startup companies in the fields of biotech, hi-tech, and cleantech as well as initiating leading technology hubs, incubators, and accelerators. Over the past decade, it has focused on creating long-term partnerships with multinational corporations such as Deutsche Telekom, Dell-EMC, IBM, PayPal, and Bayer, securing value and growth for Ben-Gurion University as well as for the Negev region. (BGN Technologies 30.10)
9.5 Nano Dimension & CBTP MOU for Additive Manufacturing Collaboration
Nano Dimension has signed a multi-year Memorandum of Understanding (MoU) with Chungbuk Technopark (CBTP) in South Korea, for research collaboration in the field of additive manufacturing of electronics. The collaboration will focus on joint research to streamline electronics development, based on Nano Dimension’s award-winning DragonFly system, the only precision additive manufacturing system of its type. Nano Dimension will provide knowledge, technical expertise and end-to-end support to CBTP researchers, to help integrate electronics into existing structures and improve components in terms of space, weights and assembly.
The partnership has already resulted in novel applications for the electronics sector, including a fully functional 3D printed IoT communication device that can shorten development times for IoT devices by up to 90%, compared to traditional devices. Researchers at CBTP’s premises in Cheongju have also printed capacitors in PCBs and side mount boards on the DragonFly additive manufacturing system. The extra space afforded through embedding capacitors and side mounting allows design engineers to pack more functionality on the circuit board which is particularly relevant for IoT and Industry 4.0 where customized designs and shapes are a growing demand.
Ness Ziona’s Nano Dimension is a leading electronics provider that is disrupting, reshaping, and defining the future of how cognitive connected products are made. With its unique 3D printing technologies, Nano Dimension is targeting the growing demand for electronic devices that require increasingly sophisticated features. Demand for circuitry, including PCBs – which are the heart of every electronic device – covers a diverse range of industries, including consumer electronics, medical devices, defense, aerospace, automotive, IoT and telecom. (Nano Dimension 29.10)
9.6 Symbolab Surpasses 100 Million Users: The New Gold Standard in Math Education
Symbolab has reached over 100 million users worldwide with its groundbreaking AI-driven math education platform. Developed with proprietary machine-learning and deep-learning algorithms, the Tel Aviv-based startup is the universal go-to math tool for solving any math problem with comprehensive steps and adaptive learning capabilities. Its unique calculator incorporates the full range of computation tools to provide an unprecedented solution for a new generation of students.
Symbolab’s complex analysis of big data provides each user with a customized learning experience tailored to their specific needs. Coupled with its algorithm-powered math solving proficiency, Symbolab has become an indispensable tool for math students from elementary school through advanced university studies. An intuitive keypad and sophisticated OCR allow users to type in or scan any math problem to generate immediate answers with detailed explanations. Its ease of use, adaptive learning capabilities and instant functionality have led to rapid adaptation by math students on a transformative scale.
Symbolab (Eqsquest) is a global leader in education technology with over 100 million users worldwide. Symbolab is committed to helping students learn math, providing step by step solutions to any math problem, as well as AI-driven personalized learning, assessments, insights and more. It is the most comprehensive math education tool, offering a fully automated platform based on advanced machine learning algorithms. (Symolab 04.11
9.7 NEC and AudioCodes Collaborate to Provide Monitoring and Analytics Solution
AudioCodes is collaborating with NEC Corporation to offer a comprehensive voice and data layer network monitoring and analytics solution. The joint solution is facilitated through integration of the AudioCodes One Voice Operations Center (OVOC) and NEC’s MasterScope and is designed to help enterprises, contact centers and service providers simplify voice network operations, improve user experience and reduce downtime. Both companies will sell the joint solution to customers around the world.
The combination of OVOC and MasterScope enables customers to monitor and analyze voice and data layers via a single pane of glass. Customers can corroborate statistics from different network layers to ensure accurate troubleshooting and root cause analysis. Current and historical call data can be viewed along with the underlying data layer information with just a few clicks, offering intelligent insights into network trends and performance that can assist in network planning and design.
AudioCodes’ One Voice Operations Center (OVOC) is a holistic life-cycle FCAPS (fault, configuration, accounting, performance and security) management and voice network design solution that combines management of voice network devices and quality of experience monitoring into a single, intuitive web-based application. OVOC enables administrators to adopt a holistic approach to network lifecycle management by simplifying everyday tasks and assisting in the troubleshooting process from detection to correction. Through the collaboration with NEC, OVOC is now able to monitor a variety of NEC network devices.
Lod’s AudioCodes is a leading vendor of advanced voice networking and media processing solutions for the digital workplace. AudioCodes enables enterprises and service providers to build and operate all-IP voice networks for unified communications, contact centers, and hosted business services. AudioCodes offers a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world. (AudioCodes 04.11)
9.8 Renesas and Altair Semiconductor Announce Collaboration for Cellular IoT Solutions
Japan’s Renesas Electronics Corporation, a premier supplier of advanced semiconductor solutions, and Altair Semiconductor jointly announced a partnership aimed at bringing ultra-small and ultra-low-power cellular IoT solutions to the global IoT market. Cellular IoT device makers will be able to use this combination of best-in-class solutions to create highly differentiated IoT products and services that offer much greater efficiencies and faster time to market. These integrated solutions will be delivered through Renesas’ sales channels, enabling cellular connectivity to all of its markets.
As a first step of this collaboration, Renesas and Altair plan to develop cellular IoT solutions with CAT-M and NB-IoT dual mode chipsets and technologies. They will also design a variety of development tools and software to further streamline the adoption of cellular IoT solutions for industrial and consumer applications. This partnership aims to achieve technical leadership in size reduction, power consumption, and IoT security.
Hod HaSharon’s Altair Semiconductor, a Sony Group Company, is a leading provider of Cellular IoT chipsets. The company’s flagship ALT1250 is the smallest and most highly integrated LTE CAT-M and NB-IoT chipset, featuring ultra-low power consumption, hardware-based security, and a carrier-grade integrated SIM (iUICC), all 5G ready. Altair partners with leading global vendors, including G+D (Giesecke+Devrient), HERE Technologies, Murata, Sierra Wireless and WNC, to provide low-power and cost-efficient modules for a range of industrial and consumer IoT applications such as trackers, smart meters, wearables, and vehicle telematics. (Altair Semiconductor 05.11)
9.9 Coral Detection Systems Wins the London AWARDS.AI 2019 for “Best AI Startup”
Israel’s Coral Detection Systems, one of the most innovative players in the field of water safety technologies, has developed the world’s first AI-based drowning detection system for residential pools that provides 24/7 active under-water drowning detection. Coral has been named winner of the Awards.AI “Best AI Startup” category. Awards.AI is The Global Annual Achievement Awards for Artificial Intelligence held annually in London.
Coral spent over 5 years developing their AI technology. Unlike drowning detection systems for public pools that aid a lifeguard on duty that can tolerate dozens of false alarms per shift, the challenge here is to reach near-perfect detection rates, while hardly generating false alarms. The magnitude of residential pool drowning has grown to be the leading cause of injury related death among kids ages 1 to 4, and the 2nd leading among kids ages 5 to 18, with hundreds dying and thousands severely injured every year. Coral Manta was developed with a single mission – to harness top-of-the-art tech to changing the worldwide pool-drowning statistics and save lives. Being recognized as an AI tech leader is extremely empowering, and the company will continue perfecting the system performance and developing additional smart systems spearheading the implementation of advanced technologies to make the world a safer place. (Coral Detection Systems 07.11)
9.10 Mini-Circuits and Vayyar Offer Development Kits for 4D Millimeter Wave Imaging
Brooklyn, New York’s Mini-Circuits has expanded its collaboration with 4D radar imaging pioneer, Vayyar to offer researchers in the Radio Frequency /microwave industry and academia a ready-to-use, 4D millimeter wave (mmWave) imaging and sensing application development platform. The VTRIG-74 is a mmWave imaging and sensing development kit powered by Vayyar’s high-resolution integrated RF transceiver technology and radar IP. This kit enables researchers and application developers to explore and rapidly develop mmWave imaging and sensing applications without the cost and overhead of building their own bespoke hardware. Potential applications already include industrial IoT, robotics, smart homes, motion and obstacle detection, vehicular operator and passenger detection, medical patient monitoring and many more.
Yehud’s Vayyar Imaging is a global leader in 4D radar imaging technology, providing highly advanced intelligent sensors to a wide variety of industries including automotive, smart home, robotics, retail and medical. Vayyar’s sensors can see through walls and objects and track and map everything happening in an environment in real-time. Unlike other products that rely on cameras and optics, Vayyar’s sensors do not collect any optic data, protecting users’ privacy at all times. (Vayyar 07.11)
9.11 NASA to Send Israeli-Designed Solar Power Generator to International Space Station
NASA is set to send a prototype of an Israeli-developed miniaturized solar-power generator to the International Space Station (ISS) in its first launch of 2020. The solar- power generator is designed at the Ben-Gurion University of the Negev (BGU), along with US colleagues from the Pennsylvania State University, University of Illinois, George Washington University, U.S. Naval Research Laboratory, H-NU Systems and Northwestern University.
The generator will be sent for testing under cosmic radiation and the enormous temperature swings in extraterrestrial operation. The prototype is said to offer a “major step forward for commercial space missions” because of a need “to invent and demonstrate feasible innovative solar solutions” that are ultra-compact and can affordably enhance specific power (watts per kilogram.) This prototype is a compact, low-mass, molded-glass solar concentrator bonded to a monolithic integration of transfer-printed micro-scale solar cells. Each of these solar cells comprises several different materials that together “can efficiently exploit most of the solar spectrum.” Especially notable are its liberal optical tolerance for accommodating errors in pointing at the sun, structural vibration and thermal distortion, while providing unprecedented specific power. (BGU 10.11)
10: ISRAEL ECONOMIC STATISTICS
10.1 Israel’s Budget Deficit Narrows Slightly
Despite strenuous efforts to reduce expenditure, the budget deficit in the twelve months before 31 October was 3.7%, down from 3.8% at the end of September, the Finance Ministry reported. Without taking into account delayed tax payments, the accumulated deficit was 3.6%.
There had been expectations for a more significant fall in the budget deficit due to the strenuous efforts by Ministry of Finance officials to reduce government expenditure. For example, Ministry of Finance budget director Meridor had frozen NIS 2.6 billion from the 2018 budget surplus and released only half the sum at the beginning of November. Accountant General Hizkiyahu had also weighed in by instructing accountants in his office not to approve new contracts or extend existing contracts except in extenuating circumstances.
Since the beginning of the year government ministries (not including the Ministry of Defense and Ministry of Public Security) have increased expenditure by 8.5%, instead of the planned 6%. Ministry of Defense expenditure has actually shrunk by 0.8% instead of a planned rise of 1.7%. On the other hand, tax collection since the start of the year has risen by just 2.3%, although the Ministry of Finance estimates that tax payment totaling NIS 2.2 billion have been postponed from October to November, making the increase more like 3.1%. October tax payments were lower than usual because all the Jewish holidays fell in that month. (Globes 07.11)
10.2 Strong Holiday Tourism Keeps Israel on Course for Record Year
Some 921,000 overseas visitors came to Israel in September and October, the Jewish holiday season, the Central Bureau of Statistics reported, up 13% from 2018. Between January and October 2019, 3.7 million tourists came to Israel, up 10% from 2018. The country has had more than 4 million visitors in the first ten months of the year, including those who did not stay overnight, up 11% from last year, and Israel looks set to break last year’s record when 4.1 million tourists visited Israel.
September and October are traditionally strong months for tourism, for vacationers rather than business tourists, with many Diaspora Jews visiting Israel for the Jewish holidays; 22% of tourists visiting Israel come from the US, with large numbers of tourists from France, Russia, Germany and the UK. (CBS 05.11)
10.3 Israel’s Unemployment Falls in the Third Quarter
The unemployment rate in Israel among those age 15 or higher fell from 3.9% in the second quarter of 2019 to 3.7% in the second quarter, according to the latest figures published by the Central Bureau of Statistics. On a monthly basis, the unemployment rate in September fell to 3.7% from 3.8% in August. The proportion of participation in the labor force fell to 63.3% in the third quarter of 2019 from to 63.6% in the second quarter. The proportion of participation in the labor force rose from 63.2% in August to 63.5% in September. (CBS 03.11)
10.4 Israeli Startups Raise Over $800 Million During October
Israeli startups raised over $800 million in October, according to press releases issued by companies that have completed financing rounds. The figure may be more as some companies prefer to remain in stealth and not to publicize the investments they have received. After raising $6.14 billion in the first nine months of the year, according to IVC, Israeli tech companies have now raised $6.94 billion since the start of 2019. This figure already surpasses the record $6.4 billion raised by Israeli tech companies in 2018, which according to IVC was up from $5.24 billion in 2017.
October was a busy month for startup financing rounds despite the holidays with insurtech company Next Insurance leading the way with a $250 million financing round. More than $600 million was raised by just seven startups last month. Retail logistics company Fabric raised $110 million, fintech company Rapyd raised $100 million and stroke diagnosis company Viz.ai raised $50 million. Cybersecurity company Namogoo raised $40 million, vehicle cybersecurity company Upstream Security raised $30 million and AI accounts payable company Stampli raised $25 million. (Globes 03.11)
10.5 Beit Shemesh is Israel’s Fastest Growing City
The Central Bureau of Statistics announced that Beit Shemesh was Israel’s fastest growing major city over the past decade. At the end of 2018, Beit Shemesh had a population of 118,676, rising 62.3% from 72,700 at the end of 2008. In contrast, Bat Yam’s population decreased by 1,500 over the same period (about 1%) to 129,000.
Israel’s second fastest growing city between 2008 and 2018 was Bnei Brak, where the population grew by 31.2%. This year Bnei Brak’s population is set to pass 200,000. Israel’s third fastest growing city during this period was Ashkelon, which now has 141,000 residents. Between 2008 and 2018, Rehovot grew by 27.4% to 142,000, while Petah Tikva grew by 22% to 244,000.
Jerusalem, Israel’s largest and capital city, grew by 21% over this period to nearly 1 million. Some 40% of Jerusalem’s residents are Arabs compared with 37% in 2008 and 30% in 1995. Israel’s second largest city – Tel Aviv – grew at a much more modest pace to 451,523 at the end of 2018.
Israel’s two largest cities in peripheral regions – Haifa and Beer Sheva – have demonstrated slow growth over the past. Haifa continues to be Israel’s third largest city but grew only 7% between 2008 and 2018 to 284,000. Beer Sheva for many years was Israel’s fourth largest city, but with a population of 209,000, it is Israel’s eighth largest city and has been overtaken by Ashdod as the largest city in southern Israel. Two Israeli cities – Herzliya and Hadera – with a population of over 95,000, are expected to join the 100,000 club in the next few years. (CBS 11.11)
11: IN DEPTH
11.1 LEBANON: Moody’s Downgrades Lebanon’s Credit Rating from Caa1 to Caa2
On 5 November, Moody’s Investors Service (Moody’s) downgraded the Government of Lebanon’s issuer ratings to Caa2 from Caa1. The ratings remain on review for downgrade.
The downgrade to Caa2 reflects the increased likelihood of a debt rescheduling or other liability management exercise that may constitute a default under Moody’s definition since opening the review for downgrade of the Caa1 ratings at the start of October. Widespread social protests, the resignation of the government and loss of investor confidence have further undermined Lebanon’s traditional funding model based on capital inflows and bank deposit growth, threatening the viability of the peg and macroeconomic stability.
The review period will allow the rating agency to assess the likelihood of a debt restructuring scenario that could lead to losses for private investors that are larger than is consistent with a Caa2 rating. Moody’s expects to complete the review within three months.
Moody’s also downgraded Lebanon’s senior unsecured Medium Term Note Program rating to (P)Caa2 from (P)Caa1, and affirmed the other short-term rating at (P)NP. The (P)Caa2 rating is also on review for downgrade.
Lebanon’s long-term foreign currency bond and deposit ceilings have been lowered to Caa1 and Caa3, respectively. The long-term local-currency bond and deposit ceilings have been lowered to B2. The short-term foreign currency bond and deposit ceilings remain Not Prime.
Ratings Rationale
Intensification of Crisis Further Undermines the Fragile Financing Model of the Government and Economy, Threatens Macroeconomic Instability
Since placing the then Caa1 ratings on review for downgrade at the start of October, Lebanon’s economic, social and political crisis has further intensified. In the absence of rapid and significant policy change, a rapidly deteriorating balance of payments and deposit outflows will bring GDP growth to or below zero, further stoking social discontent, undermining debt sustainability and increasingly threatening the viability of the peg.
Widespread social protests and the recent resignation of the government have diminished the likelihood of the passage of the 2020 budget and implementation of the agreed reforms necessary to unlock confidence-enhancing external support packages via Conférence économique pour le développement, par les réformes et avec les entreprises (CEDRE) investments and/or secure financial support from Gulf Cooperation Council (GCC) allies that are essential to ease immediate liquidity risks and allow the economy to recover over the longer term.
In general, external financing conditions have tightened further with Eurobond yields rising to distressed levels and signs of decreasing confidence in the sustainability of the peg against the US dollar.
The Lebanese economy has traditionally relied on foreign direct investment and remittance inflows from the diaspora to sustain economic activity and fund the fiscal and current account deficits. Declining cross-border capital inflows over the past few years have led the Banque du Liban (BdL, the central bank) to draw on its existing stock of foreign exchange reserves to ensure foreign currency debt service payments by the government, while maintaining the currency peg and financial sector stability.
Moody’s expects that, in line with previous political risk shock episodes, the pace of deposit outflows will increase, further depleting the country’s usable liquid foreign exchange resources and threatening the viability of the peg. The emergence of a parallel exchange rate and the trend toward deposit dollarization which as of September 2019 stood at 73% from 65% in June 2016, already indicate the fragility of the exchange rate regime.
At present, according to Moody’s estimates, the BdL has a usable foreign exchange buffer of about $5-10 billion left to draw from based on the sum of changes in the economy’s net foreign assets in the past, or when adjusting the stock of foreign exchange reserves at $29.3 billion as of September 2019 for banks’ negative net foreign asset position at over $25 billion. In the absence of new net inflows, these $5-10 billion will likely be consumed by the government’s forthcoming external debt service payments estimated at $6.5 billion this year and next, including the $1.5 billion November 28 maturity.
In this extremely fragile environment, the Caa2 rating and review for further downgrade reflect the increasing likelihood of a debt rescheduling or other credit negative liability management exercise that could result in private sector holders of government liabilities suffering significant losses.
The central bank’s holdings of government securities imply that Lebanon has options for debt management in the near-term that would limit losses borne by the private sector in case of a default event. Although insufficient to restore debt sustainability, Moody’s estimates that maturity extension or debt cancellation options involving the BdL’s debt holdings amounting to 50% of GDP could act as first loss vehicle as long as the currency peg remains in place. However, those options are diminishing the longer Lebanon’s economic and political crisis persists.
The review period will allow the rating agency to assess Lebanon’s capacity to manage the Eurobond maturities this year and early next year. The review will also allow Moody’s to take stock of the political leadership’s progress in restoring some stability that is necessary for a government to agree reforms to unlock the CEDRE lending, and potentially financial support from the GCC, and allow for deposit inflows to stabilize. This would ease currently severe liquidity pressures, and potentially restore confidence in the peg.
Environmental, Social, Governance Considerations
Environmental considerations are relevant for Lebanon’s credit profile in particular through the impact of climate change on the tourism industry which competes with other Mediterranean resorts. Signs of water shortages will become more evident due to increased demand from agriculture and industry.
Social considerations are one of the key credit drivers for the sovereign, including for today’s downgrade and review for further downgrade. Sectarian fragmentation leads to regular protracted negotiations between political parties and government stalemates, reflected in Moody’s assessment of heightened domestic political risk.
Sectarian fragmentation also impacts governance, which is partially alleviated by the BdL’s non-partisan policy focus including on behalf of the government, providing key credit support for Moody’s assessment of Lebanon’s institutional strength.
What Could Change the Rating Down
Moody’s would downgrade the rating in the event of an increased likelihood of a destabilization of the currency peg and/or a debt restructuring that would result in larger losses than are consistent with a Caa2 rating. Moody’s may differentiate between the domestic and foreign currency ratings if a potential debt restructuring seemed increasingly likely to involve materially different losses for local- and foreign-currency debt holders.
What Could Lead to a Confirmation of the Rating at the Current Level
Moody’s would confirm the current rating if financing conditions stabilize and the risk of a default event involving larger losses than are consistent with a Caa2 rating were to diminish. This would likely include confidence in forthcoming external financial assistance disbursements which would ease immediate external and liquidity risks, and support the growth outlook. (Moodys 05.11)
11.2 KUWAIT: Kuwait Hospital Market Review & Forecast Report 2012-2022
The “Kuwait Hospital Market Outlook to 2022” has been added to ResearchAndMarkets.com’s offering.
Market Size
In terms of revenue, the Kuwait hospital market has registered a constant growth with positive CAGR in the last five years (2012-2017). The majority of the healthcare sector in Kuwait is controlled by the Ministry of Health. Private participation in the healthcare sector is considerably low. The healthcare services in public sector hospitals are at highly subsidized rates. Owing to this, the number of outpatients and inpatients in public sector hospitals is significantly higher than in the private sector. However, the majority of the revenues generated in the hospital market is from the private sector hospitals. This is due to the enormous difference in prices for healthcare services in public and private sector hospitals.
Future Projections
The Kuwait Hospital Market is expected to grow at a positive CAGR from 2018 – 2022. Kuwait is a high income class country and the demand for high end luxurious stay at hospitals is increasing among Kuwaiti residents. The Kuwait hospital market is likely to witness the addition of numerous hospitals in the next five years, with a mix of publicly and privately owned hospitals. Specialty care hospitals for Maternity and Pediatrics, Infectious Disease and allied medicines including school health services & dentistry are likely to open in the future. The number of available hospital beds is also likely to grow significantly with the growth in the number of hospitals.
The revenue generated from private sector hospitals will continue to dominate the hospital market in Kuwait as private participation is likely to increase and so is the cost of private healthcare. It is expected that in the next five years, a number of general hospitals will come up in Kuwait. However, owing to the rising incidences and need for specialized tertiary and quaternary care, the number of specialized hospitals will be more in comparison to general hospitals. It is anticipated that by 2022, the revenue generated from outpatients will be greater than the revenue from inpatients due to the anticipated rise in the number of outpatients seeking private healthcare.
Market Segmentation
By Public & Private Hospitals: Majority of the hospitals in Kuwait are managed by MoH. Other government entities running hospitals in Kuwait are Ministry of Defense and Ministry of Social Affairs which operate one hospital each, specifically for military personnel and senior citizens respectively. However, in terms of revenue, private sector hospitals dominated the market in Kuwait, owing to the exorbitant cost of private healthcare in the country.
By Inpatients & Outpatients: Inpatient services are the major contributors to the overall revenue of the Kuwait Hospital Market. However, the number of patients seeking inpatient services is very small in comparison to outpatient appointments. Although the number of outpatients was more than inpatients, in 2017, the total revenue generated through outpatient appointments in Kuwait hospital market was less in comparison to the revenue generated from inpatients.
By General & Specialty: The number of general hospitals in Kuwait is greater than in specialty hospitals. Majority of the hospitals are concentrated in Al Asima Governorate and Hawalli Governorate. Most of the general hospitals in the country are operated by the MoH while a few are privately owned. Specialty hospitals provide specialized services in one particular or multiple types of diseases based on disciplines, age, organs, diseases, or other specificities.
Competition in Kuwait Hospital Market
Kuwait hospital market is largely dominated by public hospitals in terms of the number of patients and beds. However, in terms of revenue, private hospitals take the lead mainly on account of high treatment fees charged. Dar Al Shifa Hospital, Al Salam International Hospital and New Mowasat Hospital are among leading players in the Kuwait Hospital market. Royale Hayat hospital and Al Seef Hospital are luxury hospitals where healthcare services are accompanied by a luxurious hospitality experience. These are among the most expensive hospitals in Kuwait. (R&M 01.11)
11.3 UAE: The IMF Forecasts Faster UAE Growth Driven by Expo 2020
The International Monetary Fund (IMF) has revised its growth forecast for the UAE upwards following its Article IV Consultation with UAE authorities. The IMF team, following discussions with the UAE government concluded that the country’s gross domestic product (GDP) will growth up to 3% next year from a relatively modest above 1% in 2019.
On 28 October, in its Regional Economic Outlook, the IMF had given a provisional forecast of 1.6% growth in 2019 and 2.5% for 2020.
Confidence Rising
Following the Article IV consultations, the IMF team concluded that the economy is on a recovery path and likely to pick up more momentum next year, helped by Expo 2020 and existing fiscal stimulus.
Following a challenging period, the economy is recovering. Non-oil growth could exceed 1% in 2019 and pick up to around 3% next year, the fastest since 2016, on the back of Expo 2020 and fiscal stimulus. Overall GDP growth would register 2.5% in 2020.
Various independent studies in recent months have indicated that business confidence in the UAE is on the rise supported by a stable economic outlook in the medium term. The latest HSBC ‘Navigator: Now, next and how’ survey of over 9,100 companies in 35 countries and territories, finds that 83% of the UAE’s businesses anticipate sales growth over the next 12 months, with at least 35% looking to grow by 15% or more.
“The UAE’s significant diversification efforts has meant that the country is increasingly viewed as an innovative hub for trade — benefiting both domestic and international businesses. Vision 2021 combined with Expo’s international reach and connectivity are driving opportunities for export minded companies,” said HSBC UAE.
The UAE’s economic outlook remains stable, despite a slowing global economy, trade disputes, softer energy demand and heightened geopolitical tensions, according to research published by the National Bank of Kuwait (NBK). The medium-term outlook for the UAE remains stable underpinned by sizeable SWFs (sovereign wealth funds) assets and the government commitment to forge ahead with reforms.
Medium Term Challenges
The IMF team observed that sustaining robust non-oil growth after Expo 2020 remains a key priority, especially in the context of the likelihood that global oil demand will slow in the face of technological advances as well as policy responses to climate change.
To address the medium-term challenges, the IMF team discussed two key policy priorities such as promoting the growth of the non-oil private sector, including small and medium enterprises (SMEs); and strengthening fiscal frameworks to ensure both sufficient saving of oil wealth for future generations and smoothing of short-term fluctuations.
Commending the work already done by the UAE, the IMF team observed that the authorities have already taken a number of important steps, including adopting a foreign direct investment (FDI) law allowing 100% foreign ownership in selected sectors, and reducing or eliminating fees and penalties.
The [IMF] mission welcomes the authorities’ steps to implement a comprehensive national SME development strategy. Particularly important steps in this area would include lowering startup costs; operationalizing the new insolvency framework; and promoting greater financial inclusion. The mission recommends establishing a single agency responsible for SME promotion, with any possible costs to the budget recorded transparently.
Fiscal Framework
The IMF reiterated its call for establishing medium term fiscal framework rather than short term boosts through government spending. The team observed that a fiscal framework is needed that enshrines a commitment to savings, which are currently below the level required to preserve wealth for future generations. A balance between short- and long-term objectives, however, is critical, and given current economic conditions, the authorities’ existing stimulus is appropriate.
The UAE has been coping well to the regional and global economic slowdown. The government has announced several measures to boost growth by reducing cost of business. Going forward, the UAE should have longer term fiscal plans rather than short term boost in government spending to support growth.
The IMF team called on UAE authorities to complement the fiscal reforms with better monitoring and analysis of GRE-related contingent liabilities. Welcoming the fiscal policy measures already taken by UAE authorities, the IMF mission observed that frameworks should be centered around long-term fiscal anchors, while allowing the flexibility to smooth short-run oil price fluctuations as well as the non-oil business cycle. (MAGNiTT 10.11)
11.4 MOROCCO: IMF Completes Second Review Mission of Liquidity Line for Morocco
An International Monetary Fund (IMF) staff team visited Morocco from 29 October to 7 November to conduct discussions with the Moroccan authorities on the second review under the Precautionary and Liquidity Line (PLL) arrangement. The IMF Executive Board approved the PLL arrangement for Morocco in the amount of SDR 2.15 billion (about $3 billion) in December 2018. The authorities have not drawn on the PLL and intend to keep the arrangement as precautionary. At the end of the mission, the IMF made the following statement:
“Morocco’s macroeconomic policies and performance remain sound, despite volatility in cereal production, weak growth in trading partners, and elevated external risks. The Moroccan authorities remain committed to important fiscal, financial and structural reforms, which should strengthen the economy’s resilience to external shocks and support higher and more inclusive growth.
“Given a contraction in agricultural output and subdued non-agricultural activity, growth is projected at 2.8% in 2019, and inflation would slow to 0.4%. Unemployment rate remains at 9.4% in the third quarter of 2019 while labor market participation rate is at 44.9%.
“The current account deficit is projected to narrow to about 5.1% of GDP in 2019, while international reserves should reach $25.5 billion at the end of 2019, equivalent to about 5.2 months of imports. The IMF team welcomes the authorities’ intention to gradually move to a more flexible exchange rate regime, which will allow the Moroccan economy to better absorb external shocks and preserve its competitiveness.
“The fiscal deficit is projected to increase to 4% of GDP by 2019, due to a higher increase in capital investments than in tax revenues. The IMF team welcomed the authorities’ plans to accelerate fiscal reforms in the years ahead, in line with the conclusions of the Mai 2019 national tax conference, strengthened public investment management, and improved efficiency and quality of current and capital expenditures. These efforts will be critical to increase fiscal space to support public investment and social programs for the poorest segments of the population. It will also help reduce public debt to 60% of GDP over the medium term.
“The IMF team welcomes the progress made in strengthening financial sector soundness and financial inclusion, and in improving the business climate. It encourages the authorities to accelerate structural reforms to improve governance, combat corruption, reduce regional and social disparities and unemployment, particularly among women and the youth, and strengthen education.” (IMF 11.11)
11.5 TURKEY: Fitch Revises Turkey’s Outlook to Stable; Affirms at ‘BB-‘
On 1 November, Fitch Ratings revised the Outlook on Turkey’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Negative, and affirmed the IDR at ‘BB-‘.
Key Rating Drivers
The revision of the Outlook reflects the following key rating drivers and their relative weights:-
MEDIUM: Turkey has continued to make progress in rebalancing and stabilizing its economy, leading to an easing in downside risks since our previous review in July. The current account balance has improved, FX reserves have edged up, economic growth has continued, inflation has fallen and the lira has held up despite large cuts in interest rates, buoyed by more supportive global financing conditions and the recent US announcement on removal of Syria-related sanctions.
Turkey’s current account balance strengthened to a surplus of $5.1 billion in the 12 months to August, from a deficit of $57.9 billion in May 2018, and its external financing requirement has continued to ease somewhat. The rollover rate for the non-bank private sector was a robust 97% on a rolling 12-month basis to mid-August, while banks’ demand for FX has reduced in line with a fall in FX lending (of 6% in the year to mid-October) and some drawdown in their sizeable foreign currency liquidity.
Nevertheless, Turkey’s gross external financing requirement remains large and a source of vulnerability – Fitch forecasts it at close to $170 billion (including short-term debt) for 2020. The majority of the current account adjustment has come from import compression (although exports have also grown) and Fitch expects some widening of the current account balance as domestic demand recovers, with deficits of 0.3% of GDP in 2019, 0.9% in 2020 and 1.8% in 2021 – but still well below the 2018 deficit of 3.5%.
The exchange rate has been relatively stable in the face of 10pp of policy interest rate cuts by the Central Bank of Turkey since July, depreciating 0.5% against the US dollar and trading within the range of 5.48-5.92. Exchange rate effects have been the main driver of a fall in inflation, to 9.3% in September from 16.7% in July. Gross foreign exchange reserves are up $8.1 billion in the year to September and by $3.9 billion since July, to $101.1 billion.
Turkey’s ‘BB-‘ IDRs also reflect the following key rating drivers:-
Turkey’s rating is supported by its large and diversified economy with a vibrant private sector, GNI per capita that compares favorably with ‘BB’ medians and moderate levels of government and household debt. Set against these factors are Turkey’s weak external finances, high inflation and a track record of overshooting inflation targets and of economic volatility. Political and geopolitical risks also weigh on Turkey’s ratings, with the capacity to disrupt economic adjustment, and raising concerns about government effectiveness and policy predictability in an environment where checks and balances have been eroded.
Turkey’s track record of high and volatile inflation, weak monetary policy credibility and limited central bank independence heighten the risk of renewed macroeconomic instability. Following July’s dismissal of the central bank governor for failing to following government instruction on interest rates, there has been an overhaul of senior officials at the central bank, and the main policy rate has been cut to 14% from 24%. This comes against a backdrop of President Erdogan regularly expressing unorthodox views on the relationship between interest rates and inflation.
Fitch forecasts that inflation will remain relatively high at 12% at end-2020 and 10% at end-2021, compared with the central bank forecast of 5.4% (and well in excess of the current ‘BB’ median of 3.4%). Market inflation expectations have remained sticky at 9.8% in two years’ time, although are partly adaptive. Combined with Turkey’s large external financing requirement and susceptibility to shocks, this may make it challenging to substantially reduce the main policy rate without risking renewed currency depreciation that could increase stresses on corporate and bank balance sheets.
We have maintained our GDP growth forecast of 3.1% for 2020 as rising disposable incomes support consumption, and 3.6% in 2021 as lower financing costs and some recovery in confidence also feeds through to investment growth. This is below our assessment of Turkey’s trend rate of growth of 4.3%, and similar to the peer group median (average 3.3% in 2020-2021). Our 2019 GDP forecast has been revised up 0.8pp since our last review to -0.3% on the back of stronger Q2 outturns. The return to mild growth so far this year has been driven by net trade and supported by fiscal easing (as well as state bank credit stimulus) which will provide less support from Q4/19.
Geopolitical risks continue to weigh on Turkey’s rating. Recently, the US president announced the removal of sanctions relating to Turkey’s military offensive in north-east Syria. This came after the agreement struck between Turkey and Russia on the removal of the Kurdish YPG from a 30km buffer zone that the two countries will jointly patrol. In our view, the US position also makes it more likely that the implementation of US sanctions triggered by delivery of S400 missile components from Russia will be on the lighter side of those set out in the legislation, and potentially subject to a lengthy delay. Nevertheless, the US House of Representatives also passed a new bipartisan bill threatening new sanctions on Turkey, and US policy in these areas has the potential to change quickly. We do not expect Turkey’s operation in Syria to have a significant impact on credit fundamentals in the absence of a more far-reaching conflict.
Fitch forecasts an increase in the general government budget deficit to 3.3% of GDP in 2019, from 2.4% last year, reflecting weak economic activity and counter-cyclical fiscal measures, particularly in Q1. The deficit is contained by an estimated 0.5% of GDP improvement in the local government balance, and by the transfer of half of the central bank’s contingency reserve, also equivalent to 0.5% of GDP. Fitch then expects a broadly flat general government balance, with deficits of 3.3% in 2020 and 3.1% in 2021, marginally above the government targets. We consider that the government views its central government deficit target of less than 3% of GDP as an important policy anchor and would likely adopt new, one-off measures to limit budget shortfalls that arise for example from GDP growth undershooting the 5% target. Fitch forecasts general government debt will increase to 32.5% of GDP at end-2021 from 30.1% at end-2018, but still well below the ‘BB’ median of 46.7%. There has also been a steady increase in contingent liabilities, albeit from a low base.
Fitch does not anticipate a marked acceleration of structural reforms under the New Economy Program (NEP), despite the conducive electoral cycle (with no national elections now due until 2023). The NEP retains a number of structural measures that have been welcomed by the private sector such as enhancing the insolvency process, reforming the pension system, and cutting corporation tax. However, the ambitious 5% GDP growth target and some ongoing measures to stimulate state bank lending could signal a prioritization of short-term growth over more difficult structural reforms with a longer planning horizon. Fitch views the macroeconomic forecasts underpinning the NEP as highly optimistic. Turkey has never previously sustained a combination of strong GDP growth, low inflation and current account close to balance.
Banking sector metrics remain under pressure from the challenging operating conditions. The announced classification of TRY46 billion of loans as NPLs is reported to take the NPL ratio to 6.3% by year-end, from 5.0% in September and 3.9% at end-2018. Fitch expects a further increase partly reflecting the still-high Stage 2 loans (estimated at around 12%). Loan growth has been muted, despite some pick-up since July to near 5% (FX-adjusted). Credit growth has been largely driven by state banks, resulting in erosion of their capital and profitability buffers. However, sector capital adequacy (18.4% total capital ratio in September) remains comfortably above minimum regulatory requirements and has been supported by additional Tier 1, Tier 2, issuance and foreign currency deleveraging. Pre-impairment profit continues to provide a buffer to absorb credit losses, and banks’ funding costs which have already started to decline should further benefit from the lower policy interest rate.
Rating Sensitivities
The main factors that may, individually, or collectively, result in positive rating action are:
- • A sustained decline in inflation, a rebuilding of monetary policy credibility and a track record of greater macroeconomic stability.
- • A reduction in external vulnerabilities, for example evident in a sustained current account close to balance, a stronger external liquidity position and reduced dollarization.
- • An improvement in governance standards or reduction in political risk.
The main factors that may, individually, or collectively, result in negative rating action are:
- • Disruption to the path of economic stabilization and rebalancing that is consistent with lower inflation and external vulnerabilities.
- • Heightened stresses in the corporate or banking sectors potentially stemming from a sudden stop to capital inflows or a more severe recession.
- • A marked worsening in the government debt/GDP ratio or broader public balance sheet.
- • A serious deterioration in the domestic political or security situation or international relations.
Key Assumptions: Fitch forecasts Brent Crude to average $65/b in 2019 and $62.5/b in 2020 and $60.0/b in 2021. (Fitch 01.11)
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