Citi sees $5b gas revenue for Israel

"We think that the next few months will see a continuing interest in the prospects for Israel's emergence as a gas exporter."

Citi Global Markets analyst David Lubin predicts a rosy future for Israel. He says, "Gas could eventually contribute about $5 billion per year to Israel's balance of payments, at current prices."

Lubin adds, "We think that the next few months will see a continuing interest in the prospects for Israel's emergence as a gas exporter." In early January, he forecast that the natural gas discoveries will be worth around $4.8 billion a year to the economy.

Lubin predicts that Israel's unemployment rate will fall to 6% by the end of 2011, but rise to 7% by the end of 2012. He expects GDP to grow by 3.8% in 2011 and 5% in 2012, inflation to reach 3% by the end of 2012, and the shekel-dollar exchange rate to fall to NIS 3.41/$ by the end of 2012.

As for exports, Lubin says, "Israel's recovery is pretty broad based, but exports are losing some steam…. Although net exports are not as strong as they once were, there is no threat, we think, to Israel's current account surplus, which is likely to be sustained for a long time, thanks to the resilience of Israel's technology industry, Israel's likely emergence over the next few years as a gas exporter… and Israel's emergence in the second quarter as a net external creditor on its international investment position."

Lubin says that appreciation pressure on the shekel will continue, as the Bank of Israel continues to raise the interest rate.

Published by Globes [online], Israel business news - www.globes-online.com - on February 27, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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