OECD: Family assistance plan to boost growth 0.3%

Moshe Kahlon photo: Tamar Matsafi

OECD economists see 3.25% growth in Israel in 2017-2018.

Minister of Finance Moshe Kahlon's family assistance plan will boost economic growth in Israel by 0.3%, the OECD predicts in its biannual review of Israel published today.

According to the OECD economists, 3.25% growth is projected in 2017-2018, following 4% growth in 2016. Unemployment is expected to remain low. Budgetary expansion is likely to encourage growth to a limited extent, while making it more inclusive by increase spending on transportation and housing for young families. The OECD states, "These developments will be expedited if additional measures announced by the minister of finance are implemented. These include the family assistance plan (worth 0.3% of GDP), increasing the employment rate among parents with young children, and raising pension allowances. The growth forecast in the current report does not include the expected addition to GDP."

As for the real estate market, the OECD writes that the increase in real estate prices has slowed, but remains around 5% a year. "Although it has receded slightly, the ongoing tensions in the real estate market require attention from the authorities in order to keep the banking sector stable."

The OECD economists repeat their recommendation to the government to quicken the pace of reforms designed to promote competition in the "protected" sectors in order to leverage the measures already taken, increase productivity and wages, and reduce the cost of living. They emphasize that an increase in external competition, especially in the agricultural and food sector, will lower the cost of living.

The OECD predicts that private consumption will continue to lead economic growth, given the ongoing resilience in the labor market and the rise in the minimum wage. Inflation is likely to increase, rising gradually to around 2% by 2018, given the expected rise in wages.

Published by Globes [online], Israel Business News - www.globes-online.com - on June 7, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Moshe Kahlon photo: Tamar Matsafi
Moshe Kahlon photo: Tamar Matsafi
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