The OECD today published its first growth and demand forecast for Israel, as part of its general review. The OECD predicts 2% GDP growth for Israel in 2009 and 3.8% growth in 2010. The 2009 forecast is higher than the latest Bank of Israel prediction of 1.5% growth.
The OECD says, "Global financial turmoil is deepening the slowdown, with the pace of economic activity not expected to pick up substantially before the latter part of 2009. The central bank has already cut its policy rate in reaction to the crisis in financial markets.
"Monetary policy should remain biased towards easing in the near term. Further ahead, assuming a relatively trouble-free recovery from the financial crisis, the policy stance should tighten. Consideration of an increase in the fiscal spending ceiling should be put on hold in light of the increased economic uncertainty."
The OECD predicts that Israel's export growth will slow from 7.5% in 2008 to 0.9% in 2009, before picking up to 5.2% in 2010. Inflation will slow from 4.8% this year to 3% in 2009 and 1.5% in 2010. The budget deficit will rise from 1.5% of GDP in 2008 to 1.9% in 2009 and narrow again to 1.3% in 2010. The current accounts balance will rise from 2.6% of GDP this year to 3% next year and 3.1% in 2010.
Israel is due to join the OECD in 2009, and is currently undertaking the necessary measures for ascension.
Published by Globes [online], Israel business news - www.globes-online.com - on November 25, 2008
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