Growth is good, but not good enough
"There's much talk about the middle class, but the poor are as important," Stanley Fischer said, presenting the Bank of Israel's 2012 report.
Governor of the Bank of Israel Prof. Stanley Fischer today rebuked Minister of Finance Yair Lapid for forgetting the poor in his emphasis on defending the middle class's economic interests. In presenting the Bank of Israel's annual report for 2012 to President Shimon Peres and Prime Minister Benjamin Netanyahu, Fischer said, "The report describes an economy that was in good shape in 2012, but not as good as in previous years. We grew by a fairly robust rate of 3.1%."
Fischer continued, "My foreign colleagues, who would wish such a growth rate, cannot understand our disappointment, but we became used to faster growth." He added that the macroeconomic data were better than the budget, which was 4.2% of GDP, and warned, "Growth was fairly strong, inflation was low, but there is a budget problem, which must be dealt with before it grows bigger."
Fischer said, "The economy has full employment, the unemployment is the lowest in 30 years, but our deficit, which was the result of the government's structural deficit saw an increase in spending commitments, and this must be dealt with. I am pleased to see that the new finance minister is taking the problematic deficit into account and that he understands its severity. There is a lot of talk today about the middle class, but it is just as important to talk about the poor in society and how they can also benefit from economic growth."
Peres said, "The Israeli economy is outstanding, taking the objective conditions into account. One of the difficult objective conditions is that all spending by the Israeli economy are in accordance with the size of the government, but the security issue is an economic challenge in which the size of the government is not the determining factor, but the size of the threats."
Peres added, "These have been impressive years by every measure for the Israeli economy, and I am pleased to have the privilege as President to thank Stanley Fischer on behalf of the State of Israel. When I see you, my faith in people grows. In 1984, when Israel faced an economic crisis with 400% inflation, I was advised by Stanley Fischer, who was in the US at the time. Your advice helped me then, I kept all my promises to tame inflation, which saved the economy. Your contribution to Israel today is also great.
"The faith you find in people, I find in you. I am constantly impressed how one man can help an entire country. I greatly thank you for the common effort."
In presenting the report to Netanyahu, Fischer said, "I wish to present you the Bank of Israel's Annual Report for 2012. This is the last report that I will give you. I could not submit a report to you when you were finance minister, but this is the fifth report I am submitting to you as prime minister. The report describes an Israeli economy which is not in bad shape. There are things which need fixing, but we nonetheless had faster growth than almost any OECD member state."
Netanyahu said, "Thank you for the report. Thank you for the reports and what stands behind them - your important work and our important work, together, to bring the Israeli economy to the heights of Western economies. We see what is happening in Europe, and it did not happen here because of our responsible management of the economy over the past four years. Thanks to this, the Israeli economy has handled the global economic crisis better than most Western countries, and we will continue to manage it in this way.
Published by Globes [online], Israel business news - www.globes-online.com - on April 2, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
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