Prof. Rafi Melnick of the Arison School of Business at the Interdisciplinary Center, Herzliya sees the current global recession as the result of "a global shock that happens once in a century."
"The impact of the crisis," he estimates, "in which we are caught is expected to lower growth in Israel to 0.7% in 2009 and this would be the lowest rate of growth recorded by the economy since the economic crisis in 2001 and 2002, when there was negative growth."
At the Caesarea Center Conference for the Capital Markets and Risk Management on Thursday, Melnick, who developed the Melnick Index for measuring Israel's economic situation, will present his detailed macro-economic forecast for economic developments in Israel in the coming year. Melnick's annual forecast, has been a traditional feature of the conference in recent years, and has gained a significant reputation.
Melnick also forecasts inflation of 1.7% in 2009 and sees unemployment rising to 7%. He expects the Bank of Israel to continue coping with the crisis by further decreases in interest rates, as needed, and assistance to the financial and banking system.
"The economic clock is not synchronized with the political clock," Melnick says, "and we cannot allow the political clock to cause us to make economic mistakes, such as irresponsible proposals of the type we are currently hearing like expanding fiscal measures or a comprehensive safety net."
"The Ministry of Finance and Bank of Israel have so far acted correctly," he says, "and it is important to carry on in such a responsible way."
Published by Globes [online], Israel business news - www.globes-online.com - on December 2, 2008
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