"Growth in 2013-14 is expected to be 3.3%, but if natural gas is excluded, we see a growth rate of 2.4% in 2013 and 2.9% in 2014. When we consider economic activity and jobs, the contribution of natural gas to jobs in the short term is very low," Governor of the Bank of Israel Dr. Karnit Flug said in her first appearance before the Knesset Finance Committee on Monday morning. She presented the Bank of Israel's budget for 2014, and provided a quarterly macroeconomic review.
"In the long term," said Flug, "gas is a contributing factor, but not in the immediate term. We therefore look at the economy both with and without gas. We see growth picking up in the following years. The Israeli economy grew fast over the past decade, and it will continue to grow, but at less than the historical rate."
On exports, Flug is apparently not very concerned by the renewed appreciation of the shekel against the dollar. "The main problem with exports lies with commodoties and import alternatives, which are hard to compete against given the exchange rate," she said, adding, "The sensitivity of exports to the exchange rate is not very high, amounting to 0.2%, meaning that a 1% appreciation in the exchange rate affects exports by just 0.2%. This is not a very high sensitivity, and high-tech industries are the least affected.
"The sensitivity in low technology industries is much higher. When we consider the effect of the exchange rate on exports, the emphasis is on the effect on jobs in low technology industries where most employees work, and not in high tech."
Published by Globes [online], Israel business news - www.globes-online.com - on January 6, 2014
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