"I'm frequently asked about the influence of the security situation on the economy including the tension with Iran," said Governor of the Bank of Israel, Prof. Stanley Fischer during a press conference at the World Bank - IMF annual meeting in Tokyo. "There is a certain effect felt in the stock market in a particular way, but my feeling is that if there is an impact, then it is small.
Fischer added that the Israeli economy is "in good but not excellent shape," and explained that "we recovered from the global economic crisis very swiftly and we have grown at a rate of close to 5% in the past few years. This year we are in a slowdown, and we will only grow by 3.3% in 2012 and the forecast for 2013 is 3% growth. A major part of the slowdown stems from the global slowdown and a fall in exports."
Fischer also spoke about unemployment and Israel's labor market. He said, "We see a very impressive situation in the labor market. Unemployment continues to be about between 6% and 7%. I say 'about' because there is a new method of measurement and we do not fully understand if it is currently correct. But the main thing is that we see a rise in participation and this is an especially important matter because Israel's suffers from low rates of participation."
Regarding the fiscal situation in Israel and the budget deficit, Fischer said that the original target of a deficit of 2% of GDP was a "little ambitious" and that "when the situation became clear, some people, me included, proposed that the government deal with it immediately despite the fact that we all understood we were talking about an election year. To our surprise, despite the approaching elections, the government decided to act and raise taxes including VAT, raise income tax, and taxes on cigarettes and alcohol. They were very significant measures in the area of taxes."
Published by Globes [online], Israel business news - www.globes-online.com - on October 11, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012