ECONOMIC SURVEY - 12-Jul-95

(COMMUNICATED BY GPO ECONOMICS DESK)

12 July 1995

MACRO-ECONOMIC SECTOR:

* EXPORTS UP 11.9%, IMPORTS UP 20%, DURING FIRST HALF OF 1995.
Total exports were $8.56 billion during the first half of the year, up 11.9% compared to the same period in 1994, while total imports were $13.69 billion during the first six months of the year, up 16.3% compared to the same period in 1994, the Central Bureau of Statistics reported. Exports, excluding ships, aircraft, and diamonds, rose 10.6%, while imports excluding ships, aircraft, diamonds, and fuel, rose 20.2% during the first half of the year. Israel's total trade deficit rose 24.5%, to $5.01 billion during the first half of the year compared to the corresponding period in 1994, while the trade deficit excluding diamonds, aircraft, ships, and fuel rose 39.2% to $4.05 billion.
Central Bureau of Statistics - David Neumann, 972-2-6553400

* DECREASE OF $846 MILLION IN FOREIGN CURRENCY RESERVES.
Israel's foreign currency reserves declined by $846 million to reach a level of $8.780 billion at the end of June, the Bank of Israel reported. The Bank stated that the decline was primarily due to the Government's repayments of loans, although the transfer abroad of foreign currency bank deposits from Israel also had an effect. The Bank also found that foreign debt assumed by the business sector, through commercial banks, and which had been one of the primary factors causing the increased flow of foreign currency into Israel, slowed down during the month.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712

PEACE ECONOMICS:

* FREE TRADE AGREEMENT PROPOSED FOR ISRAEL, JORDAN, AND PALESTINIAN AUTONOMY.
A team of experts led by Harvard University's Institute for Social and Economic Policy in the Middle East released a report this week urging the creation of a Free Trade Area between Israel, Jordan, and the Palestinian Authority, by 2010. During the next fifteen years, the report states, the sides would be encouraged to gradually lower and harmonize tariffs and non- tariff barriers, liberalize their economies, and put in place safeguard mechanisms in order to deal with any problems that might occur. The experts said that this agreement offered advantages for all sides, though Israel's economic benefits would be relatively smaller due to the size of its economy.
Harvard University - Anna Karasik, 972-52-508352

* ASHDOD-GAZA RAIL LINK TO BE COMPLETED AT A COST OF NIS20 MILLION.
NIS20 million has been allocated to complete the railway linking the Port of Ashdod and Gaza's Erez Junction, the Transportation Ministry reported. The final link to be completed is the 9 kilometer stretch from Zikim to the Erez Junction. The Ministry said that the link is being completed in order to facilitate the transfer of goods to the Palestinian Authority from the Port.
Transportation Ministry - Eli Dannon, 972-2-319690

* RE DEPLOYMENT COSTS ESTIMATED AT NIS1.5 BILLION.
Early estimates of the cost of redeploying the IDF in Judea and Samaria are estimated at NIS1.5 billion, sources in the Defense Establishment report. Because the elements of re deployment have not been finalized, this is not a final total, sources noted.
Defense Ministry - Dan Weinreich, 972-3-6975546

FOREIGN TRADE:

* ISRAEL FOREIGN TRADE RISK INSURANCE COMPANY (IFTRIC) TO GUARANTEE $100 MILLION FOR TRADE WITH CHINA.
The Israel Foreign Trade Risk Insurance Company (IFTRIC) will guarantee up to $100 million worth of trade with China for Israeli firms dealing with China, the Israel Export Institute reported. Israel currently enjoys Most Favored Nation trade status with China. Israel's primary exports to China are telecommunications equipment, machinery for the chemical industry, products to improve agricultural yield, and industrial chemicals.
IFTRIC - Doron Krausner, 972-3-5631777

GOVERNMENT SECTOR:

* GOVERNMENT BEGINS DEBATE ON 1996 BUDGET.
On 9.7.95, the Government began its discussions on the size and form of the 1996 budget. The Finance Ministry reported that it believes that the major problems facing Israel for the coming year are the growing balance of payments and balance of trade problems. It intends to address these problem by making fiscal restraint central to economic policy, and by implementing plans to encourage greater private sector savings, and to moderate public consumption. The Government will need to re-order its priorities in order to deal with the issues surrounding the peace process and possible re deployment of the IDF in Judea and Samaria, Finance officials said.
Finance Ministry - Eli Yosef, 972-2-317201

DELEGATIONS: