"For the first time in five years of continuous growth, in the fourth quarter of 2008 it is projected that GDP will not rise," Bank of Israel research division deputy manager Dr. Michel Strawczynski said today in a lecture at semiconductor maker Intel.
According to Strawczynski, the recession in the US started at the beginning of 2008, but its impact on Israeli exports began to be felt only in the third quarter of the year. Strawczynski said that the delayed reaction was because of the nature of this recession: in contrast to the recession that prevailed in the US in 2001, which hit high-tech industries first, the current recession began in other sectors of the US economy, headed by the housing market.
Strawczynski went on to explain that, according to the third quarter employment survey, the number of employed people in the economy has already fallen, and that it appeared that there would be a further fall in the fourth quarter. However, he said that the picture was not uniform across all sectors. In transport and communications, employment rose substantially in the third quarter.
Strawczynski sees the extent of the impact of recession on Israel's high-tech industries as dependent on recovery in the US economy. According to the latest OECD forecast, a US recovery will start in the third quarter of 2009. This is on the assumption of a soft landing for US fiscal policy, and a reduction in the medium term (between two and five years) of the fiscal deficit which the US has been running for several years.
Published by Globes [online], Israel business news - www.globes.co.il - on December 10, 2008
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