While some hesitate about investing in Israel, Matthew Bronfman has no hesitation. He has announced that he bought the last 15% stake in Ikea Israel for about $160 million.

The store has been a favorite for Israeli’s, and the chain has been expanding in Israel.

According to Globes: “The main reason why Bronfman exercised the option to buy out his partners is the planned expansion of IKEA Israel. The company value for the deal is based on the IKEA Israel store in Netanya and the brand’s potential in Israel. The construction of a second store in Rishon LeZion is stuck in legal battles over the building permit for the site at Me’uyan Soreq. IKEA also plans to open a third store in the Galilee within three years.”

This looks like it will turn out to be a very good investment.

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Citing risks in Israel, IDB head Nochi Dankner is looking to invest large amounts of money outside of Israel. According to Globes: “Dankner said, “IDB wants to acquire more overseas companies. We are investigating additional deals and not only in the financial sector. I am certain that IDB will continue to expand its global portfolio.” He continued, “There are risks in Israel, and therefore it is only logical that a group like IDB would want to undertake activities outside of the country.”

While many would say that this is a bad sign for the Israeli economy,  I think that there are some good things that can come out of this. If Dankner starts to focus investing away from Israel, this may just open up Israeli investments to some unfamiliar faces. It’s well known that about 10 local families control a huge segment of the Israeli economy. For the health of the economy it would be great to see some new, fresh faces, take the investment reigns of the Israeli economy.

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Facing a recession and looking for ways to find cheap financing, the State of Israel Bonds successfully raised about $125 million in Boca Raton. That should make members of the treasury happy as this was the kick off event for the Bonds.

What I don’t really understand for investors is why go the route of Israel bonds?  Not that beggars can be choosers, but why not try some direct investment into the Israeli economy? $125 million can create a ton of jobs, new businesses, and return on investment. Why are donors happy with getting a minimal return when they can do so much more by really investing, and getting potentially, much higher returns?

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The famed economic forecaster, Professor Nouriel Rubini, who is professor of economics at the Stern School of Business, has come out saying that he thinks Israel will sport GDP growth of about 1% in 2009. While that’s well off the 5-8% growth seen in recent years, it is still far superior to the projected growth( or negative growth) of most developed countries.

Globes reports:”RGE Monitor’s projection is for negative global growth of 0.5% in 2009. This is a far more pessimistic forecast than that of the IMF, whose latest estimate is for 2% positive growth. According to RGE, the US economy is so far only halfway through the recession that began to manifest itself in December 2007. The firm says this will be the longest recession in the US economy since the Second World War. RGE sees the US economy shrinking by 3.4% in 2009.”

He also sees Euro zone negative growth of 2.5%.

For investors looking for strong economies in a global slowdown, it pays to take a look at Israel.

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Aaron Katsman is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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