The Bank of Israel has raised its 2010 GDP growth forecast to 3.5% from 2.5%. The revision is based on "positive information about economic activity in the second half of 2009 in Israel and globally and following the improvement in global trade growth forecasts for 2010."
The Bank of Israel, led by Prof. Stanley Fischer, predicts that the unemployment rate will fall to an average of 7.1% for all of 2010, which implies a move below 7% by the end of the year.
Exports are expected to rise as the global economy recovers.
The Bank of Israel said that domestic uses are increasing more slowly than exports, except for investment and the consumption of durable goods, which are rising rapidly. "The increase in the consumption of durable goods and in investment in machinery, equipment, and transportation vehicles brings in its wake a surge in imports, so that the surplus in the current account is expected to contract."
The main risk to the growth forecast is lower than expected global economic growth.
Comparing figures between the Bank of Israel's current forecast and its previous growth forecast, made in September 2009, shows expected business product growth of 4.1%, compared with 2.8% in the previous forecast; growth in private consumption of 4.8%, compared with 1.1%; growth in private consumption, excluding durable goods, of 3.1%, compared with 2.2%; and a jump in gross domestic investment - 9.3%, compared with only 1.9% in the previous estimate.
Published by Globes [online], Israel business news - www.globes-online.com - on January 11, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010