Governor of the Bank of Israel Stanley Fischer gave a review of the Israeli economy before the governing board of the World Jewish Congress in Jerusalem this evening. "The performance of the Israeli economy has been relatively good in the recent period," Fischer said. "In April-June, figures were published indicating a slowdown in exports, and we were concerned at the situation of exports, which represent 40-45% of Israel's GDP. Our internal estimates at the Bank of Israel were for an annual rate of growth of 4.6% in the second quarter, but at that time this estimate seemed too high in the light of developments, and we preferred not to place too much reliance on it. Later, the Central Bureau of Statistics' national accounts estimates were released, and it turned out that growth was indeed 4.7% in the second quarter.
"The fact that we came through the crisis in better shape than other countries is thanks to the fact that we went into in a better position: responsible fiscal policy and a balanced budget; the ratio of public debt to GDP was on the decline, and household debt in Israel was low in comparison with other countries."
Referring to the latest attempt at direct talks between Israel and the Palestinians, Fischer said, "Resolving the dispute with our neighbors, with its consequences for the security situation of the State of Israel, is of course a most significant challenge. There are those who argue that the fine growth rates of the Israeli economy in the years before the crisis demonstrate that there is no connection between the geopolitical situation and economic growth. I am convinced that in conditions of peace, the Israeli economy will be able to grow at higher rates that in a situation of an unresolved dispute with our neighbors. If the security situation changes and we move in the direction of genuine peace, as I hope, this will boost the economy by 5-6% in the long term. Investment in education and human capital will be the basis of our success."
Published by Globes [online], Israel business news - www.globes-online.com - on September 1, 2010
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