The Organization for Economic Cooperation and Development (OECD) today published its annual forecast for Israel, predicting 2.5% growth in 2016 and 3% growth in 2017. In its previous forecast, in November 2015, the OECD predicted that the Israeli economy would grow by 3.2% in 2016.
The OECD review states that an expansionary budget and low interest rates and fuel prices are likely to support domestic demand and employment. In its forecast, the OECD notes that first quarter exports were weak, but predicts that they will gradually recover in line with recovery in overseas demand.
The OECD asserts that taking into account low inflation and super-expansionary global monetary policy, the Bank of Israel's easy money policy is essential in order to prevent shekel appreciation. The OECD's economists write that tax cuts, combined with a cut in government spending in 2016, would support the economy in the short term, but that the government would have difficulty in the medium term in meeting the target for cutting public debt.
The OECD economists state that the authorities in Israel should keep a careful watch over the constant tension in the real estate market. They add that the efforts to encourage competition in various sectors, mainly in agriculture and banking, were praiseworthy, and designed to increase purchasing power.
Published by Globes [online], Israel business news - www.globes-online.com - on June 1, 2016
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