Lapid sees no slowdown

Finance Minister Yair Lapid: There is no slowdown in growth; the figures are getting back to normal.

Minister of Finance Yair Lapid claims that the data that the Central Bureau of Statistics published on Sunday, which show that growth is slowing, do not constitute a trend, and says that 5% annual growth is not out of the question.

"Israel should strive for robust growth of more than 5% a year over the next decade," Lapid told the Sderot Conference today. "This is not out of the question; we've had similar numbers in the not too-distant past, but we must act in every way possible to stimulate growth. I know that in the last quarter exports plummeted, which caused reduced growth, but this is not a trend. Consumption and production figures are good, and we already have more up-to-date data which show that exports rose by 5% in September and by 6% in October, indicating that growth data are returning to normal."

Commenting on the wave of layoffs, Lapid said that the government would try to intervene, but cautioned, "The government's ability to intervene in the private sector is limited. What it can do, and what it will do, is to ensure that the economy will switch from low technology industries, which are firing people, to innovative industries, which are hiring people and paying them better salaries."

Lapid reiterated his criticism of trickle-down economics, which Prime Minister Benjamin Netanyahu has adopted. "This Reaganomics idea from the 1980s that you should let the rich make unlimited profits and enjoy every possible tax break, and the money will then trickle down to the poor, simply doesn’t work. It failed in the US, it failed in the UK, and it failed in Israel. When the money only flows upward, it stays at the top. The money should not be at the top. We need to invest the money in the middle classes. From there, it will flow downward, and it will flow upward," he said.

"Innovation is not the goal; innovation is the means," he added, "Innovation is the economic engine that creates an economy in which the middle class is at the center, and the middle class earns more and the cost of living does not crush it. Quality of life is a broad concept, but it begins with people being able to make ends meet; when they earn enough and make ends meet, even after paying the mortgage or rent.

"This will happen when we achieve a situation in which the Israeli tax system makes sure that the middle class is the first beneficiary of the successes of the innovative society; if we exploit the natural gas discoveries not to expand government bureaucracies, but to move the country from being based on expensive and polluting fuels to a greener and less expensive country that uses the money from gas to open daycare centers and schools and to improve the health and welfare systems; if we wage an uncompromising war on the cost of living in Israel by removing barriers, opening the economy to real competition, conducting a determined struggle against black money, and dealing with the Israeli housing crisis in an consistent and uncompromising way.

"Our job, as a government, is to deal with both sides of this equation: to ensure that by instilling systemic innovation we allow Israelis to succeed far more than they have succeeded until now; and to ensure that this time, for a change, they will also benefit from their success."

Published by Globes [online], Israel business news - www.globes-online.com - on November 19, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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