Shlomo Maoz: The Gaza operation will not substantially influence the markets.
Leading Israeli economists feel that the impact of the IDF operation against Hamas in Gaza on the country's economy will not be significant.
Excellence InvestmentsChief Economist Shlomo Maoz said, "The world is in recession and Israel is in a slowdown. Global markets are already volatile so this operation will not have a substantial influence. There is not necessarily any connection between today's falls and the operation in Gaza. We are anyway seeing the highest volatility in the exchange rate and bond market, and therefore in my opinion the Bank of Israel will lower interest rates by only 0.5%. I also do not see a substantial influence on the budget because the cost of the operation is not high and within the daily agenda, unless we get dragged into a regional conflict. I expect to see factories in the south operating very soon." Psagot GroupChief Economist Vered Dar said. "The influence of the operation in Gaza, of course depends on the answer to the question of how long and how expensive the story will be. Our working assumption is that the story will continue for a number of weeks at a much lower intensity than we saw on Saturday, and there will be no repeat of the Second Lebanon War from the point of view of military cost and the high budget, or the Second Intifada from the point of view of the heavy cost in production. The influence of the Gaza operation on the shekel is temporary and has no importance and this is also true for the bond market. An influence on tomorrow's decision to cut interest rates cannot be ruled out. If there is some influence, we estimate that the interest rate may be cut by 0.75% instead of 1%."
Published by Globes [online], Israel business news - www.globes-online.com - on December 28, 2008
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