"Israel's economic performance is improving," says Barclays Capital today in a particularly optimistic review. Analysts Daniel Hewitt and Koon Chou add that the "Israeli economy appears headed for a full recovery", although they say there is a growing risk of inflation.
Hewitt and Chou predict that Israel's GDP will grow by 4% in 2011 and 4.2% in 2012, assuming the continuation of strong trends in consumption and investment into 2011-12.
However, Hewitt and Chou also say that inflation is rising and becoming a macroeconomic risk. They believe that inflation will rise from the current 2.5% to 2.7% in 2011.
Hewitt and Chou see Israel's offshore gas reserves as supplying all of Israel’s energy needs for the next 40 years. "In the end, Israel will likely be exporting natural gas and continuing to import oil, with the possibility of eventually becoming a net exporter of energy." They estimate that Israel’s natural gas production will increase from $1 billion in 2010 to about $6 billion per year in 2016, amounting to 2.4% of GDP at current prices.
Published by Globes [online], Israel business news - www.globes-online.com - on December 8, 2010
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