Fischer: Gaza fighting has small economic impact

However, Stanley Fischer told CNBC that the longer the fighting goes on, the longer Israel's economy will take to recover.

The fighting between Israel and Hamas in Gaza is likely to have only a limited impact on Israel's economy if it ends quickly Governor of the Bank of Israel Prof. Stanley Fischer told "CNBC" yesterday. “If this ends in a day or two, we’ll come out of it without much impact on the economy despite all the very difficult scenes that we’re seeing at the moment," he said.

Fischer said that the conflict was slowing economic activity, but that activity was largely continuing in the rest of the country, and enterprises in the south are still operating. The slowdown will end when there is a ceasefire.

Fischer compared Operation Pillar of Cloud with the Second Lebanon War in 2006 and Operation Cast Lead in Gaza in December 2008-January 2009, which he said had an impact while they’re going on but then the economy bounced back sharply.

Fischer said that the Israeli economy was also starting out in a fairly strong position. “The inflation rate is at 2%, the balance of payments is more or less balanced, the stock market has been rising lately, and we’re at pretty close to full employment so most of the indicators are very positive,” he said.

He cautioned, however, “The more fighting that goes on, the longer it goes on, the more intense it is, the more immediate the damage and the longer it will take to recover from it."

Published by Globes [online], Israel business news - www.globes-online.com - on November 21, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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