"In September-December 2008, the slowdown in economic activity became more severe, and inflationary pressures eased," says the Bank of Israel in its review of the fourth quarter of 2008, "Recent Economic Developments No. 123, September to December 2008", published today.
The Bank of Israel adds, "The decline in world trade was reflected by the first drop in Israel's good exports after a long upward trend. The negative impact on the public's wealth, increased employment insecurity and the erosion of the real wage undermined consumer confidence and resulted in a slower rise in private consumption.
"Signs of the slowdown were evident in the labor market too, as the rise in employment in the business sector halted and the number of work seekers (particularly university graduates) and the number of claims for unemployment benefit increased significantly. The decline in economic activity was expressed in a fall in tax revenues, so that in 2009 a large increase in the budget deficit is expected.
The Bank of Israel also noted, "Towards the end of the period reviewed, the military operation called Cast Lead was launched in the Gaza Strip. The effect on economic activity, however, seems to have been limited."
Published by Globes [online], Israel business news - www.globes-online.com - on February 11, 2009
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