Governor of the Bank of Israel Prof. Stanley Fischer said today that there were signs of recovery in the Israeli economy, but complacency must be avoided, given the severity of the crisis.
"There is no question that our situation is much better," said Fischer, but immediately added a caveat. "But don’t exaggerate, the situation is still tough. We aren’t sure when economic growth will resume. We had inflation in June. The situation is improving, but it's still not simple."
Fischer spoke in Jerusalem, at a forum of managers from Israeli newspaper "Hamodia".
Between Fischer's optimistic comments, he was pessimistic about the labor market, one of the cornerstone's of the economy. "We're aware that the unemployment situation is still poor, and that it's liable to worsen with a renewed spike in unemployment. Am I optimistic? I'm very optimistic about our economy, but don’t exaggerate. The situation has begun to improve, but hard times are still ahead of us. Our situation is better than in most Western countries."
Fischer added, "We see more signs of improvement, but this can be said and be forgotten. What we mustn’t forget is that the situation is very serious - the most serious since the end of World War II - and has caused immense damage, and we'll have to learn the lessons. There are signs of growth, mainly in Asia - in China and India, but not in Japan. Another important factor is that the IMF, which for the first time in two years, raised its global growth forecast for 2010. Another sign is the recovery in global trade, including exports, which were the worst hit item in this crisis. We're also seeing signs of growth."
Fischer noted that the Israeli economic situation was tough, but said, "We're also seeing positive signs." He cited the growth in exports in the past two months, "which is the most important factor in the economy."
Yesterday, the Bank of Israel published the Composite State of the Economy Index for June, which rose by 0.2%, the first increase in 12 months. Fischer favorably noted, "The jump in the Israeli Managers Procurement Index, which rose over the 50% threshold, indicates that more procurement managers are reporting an increase in procurements than managers reporting a decline. We also saw that financial markets began to rise in the first quarter, the bond market has recovered, and companies are able to raise capital."
Published by Globes [online], Israel business news - www.globes-online.com - on July 20, 2009
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