The recession in Israel, which began in July 2000, before the outbreak of the intifada, and continued for over three years, ended in November 2003, according to the annual review by the Bank of Israel research department. The review will be published at the end of March, together with the Bank of Israel’s annual report for 2003.
The research department notes that both the Bank of Israel State of the Economy Index and the Bank of Israel Recession Probability Index show that the severe recession in the Israeli economy since 2000 “has come to an end.”
The research department thereby agreed with Minister of Finance Benjamin Netanyahu, who officially declared the recession over two months ago. “We’re out of recession,” Netanyahu said at the time, provoking a chorus of severe criticism.
The Bank of Israel review said that the recession had been the longest and most severe in Israel since the early 1950s.
Estimates by the Ministry of Finance, other economic ministries, and the Central Bureau of Statistics gave the following figures:
- The recession cost Israel 10% of GDP during the three years of the intifada, amounting to NIS 50 billion, compared with the economy’s estimated 4-5% growth potential. The loss in GDP totaled 4.1% in 2001, 3.2% in 2002, and 2.7% in 2003.
- Per capita GDP dropped by 7% in shekel terms, and by 14.6% in dollar terms, from $19,200 to $16,400.
The Ministry of Finance raised its growth forecast for 2004 from 2.5% to 2.8% at the beginning of the month. The Bank of Israel forecast is 2.3%. International investment banks and overseas rating companies predict 3.1% GDP growth.
Published by Globes [online] - www.globes.co.il - on March 14, 2004