The “Economist Intelligence Unit” (EIU) has kept its economic policy outlook and main economic forecasts for Israel unchanged despite its prediction of political turmoi. “Political turmoil will continue to characterize the domestic political scene in Israel, and public discontent with the country's leaders is rising, fuelled by alleged corruption scandals involving senior public officials.” The EIU says that initial widespread public support was quickly overtaken by increasingly criticism of the way it was conducted by Prime Minister Ehud Olmert, who is accused of hesitancy and inconsistency.
The EIU says, “The forthcoming debate on the 2007 budget will pose some difficulties for the current Kadima-led ruling coalition government, and the Labor Party might face internal difficulties and even a challenge to its current leader (and defense minister), Amir Peretz.”
The EIU continues, “The impact of the war on the economy, though still not fully apparent, will be to depress real GDP growth in 2006-07 and raise fiscal expenditure from previous estimates. In 2008, however, economic growth should rebound and the budget deficit should narrow.”
In this week’s addition, “The Economist” states, “Ehud Olmert, the prime minister, clinched a deal to bring Avigdor Lieberman's right-wing Yisrael Beiteinu into the governing coalition, to shore it up against possible collapse.” The magazine notes, “His new title is ‘minister for strategic threats’; pundits are joking that the chief strategic threat will be Mr. Lieberman himself.”
Published by Globes [online], Israel business news - www.globes.co.il - on November 1, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006