Economic growth slowed in 2014, but picked up steam towards the end of the year, and is expected to reach 3.5% in both 2015 and 2016, while unemployment remains low, according to a new forecast for the Israeli economy published by the Organization for Economic Cooperation and Development (OECD).
The organization's economists also noted that the low oil prices, combined with the interest rate cuts and the increase in the minimum wage were likely to boost domestic demand, while the gradual improvement in the global economy will probably increase Israel's exports.
"An accommodative monetary policy is still appropriate to support the current growth rate, and prevent an undesirable appreciation of the shekel," the report stated.
The OECD economists also said that Israel should continue its policy of reducing its national debt in order to provide more room for fiscal maneuvering, but that this policy should be based more on increasing revenues, rather than cutting spending.
The review further states that Israel should carry out structural reforms in order to bolster competition in the market, as well as educational reform to help people in the religious and Arab sectors to join the labor market, thereby supporting growth.
In housing, the OECD believes that the government should improve coordination between public agencies in order to respond better to demand in the housing sector.
Published by Globes [online], Israel business news - www.globes-online.com - on June 3, 2015
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