The International Monetary Fund (IMF) has released a positive report on the Israeli economy in 2007, together with projections for 2008. The Executive Board of the International Monetary Fund praised Israel's economic performance in 2007, calling it "exceptional.".
"Executive Directors welcomed the Israeli economy's exceptional performance, which reflects both sound policy implementation and strong global growth," the report says.
The Executive Board expresses total support for continuation of the fiscal policy of Minister of Finance Ronnie Bar-On, which led to fiscal balance in 2007, and for the monetary policy of Governor of the Bank of Israel Stanley Fischer, which stabilized inflation.
For 2008, the IMF Executive Board sees a GDP growth rate of just 3.5%, 2% lower than in 2007. This forecast corresponds to the pessimistic scenario in the Bank of Israel's projections released two weeks ago.
On inflation, the IMF estimates that inflation will be 2% for 2008 as a whole, in the middle of the government's target range, compared with 3.4% in 2007. However, the IMF also estimates that until mid-2008, the twelve month inflation figure will be above the price stability target range, at 3.1%.
The IMF sees no interest rate hike by the Bank of Israel in 2008, and say the bank's key rate will remain at 4.25%.
Both Fischer and Bar-On welcomed the report. Bar-On added that "the IMF report is further expression of the need to maintain fiscal discipline."
Published by Globes [online], Israel business news - www.globes.co.il - on February 14, 2008
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