ECONOMIC SURVEY - 22-Jan-95

ECONOMIC SURVEY

(COMMUNICATED BY GPO ECONOMICS DESK)

MACRO-ECONOMIC SECTOR:

* PRIME MINISTER MEETS WITH PRIVATE SECTOR LEADERS.
A majority of the private sector business leaders who met with Prime Minister Yitzhak Rabin over the weekend, criticized the Government's macro- economic management of the economy. Elements that were criticized were the recently imposed tax on the Tel Aviv Stock Exchange, the Bank of Israel's insistence on keeping interest rates high, and the high tax burden. While most of the business leaders called for immediate cancellation of the bourse tax, a number said that, though, the tax is logical, the method in which it was enacted was not. A number of participants, however, support the tax. A majority of the participants also called for the Bank of Israel to reduce interest rates in order to increase the economy's growth. Participants also discussed methods by which to devalue the shekel and to change the shekel's exchange rate.
(Ha'aretz, 22.1.95, Ma'ariv, 22.1.95)

* RETAIL SALES UP 10% IN 1994, FOURTH QUARTER RETAIL SALES DOWN BY 14%.
The Central Bureau of Statistics, on 18.1.95, reported that retail sales in chain stores were up by 10% in 1994 compared to 1993. The growth was a result of a large increase in sales during the first quarter and steady growth of between 9-11% during both the second and third quarters. The fourth quarter was 14% lower than the same period in 1993. Retail food sales increased by 10% in 1994, the bureau reported. The chain store retail sector accounts for close to 25% of the value of private consumption and approximately 30% of all food sales.
Central Bureau of Statistics - David Neumann, 972-2-553400

PEACE ECONOMY:

* BUSINESS LEADERS VISIT TUNIS.
A group of leading industrialists flew to Tunis today, (22.1.95), to meet with Tunisian Government officials, the head of Tunisia's Central Bank, figures in Tunisia's financial markets, and members of that country's Manufacturers Association. The group is being led by Benny Gaon, Managing Director of Koor Industries, and Koor's Chairman, Prof. Eitan Sheshinsky. Other members include Emmanuel Sivan, Chairman of Bank Hapoalim, Michael Strauss of Strauss Dairies, and Israel Zamir, Managing Director of Tadiran. A number of American businessmen including representatives from Shamrock Investments, Merril Lynch, Smith Barney, and Oppenheimer Investments are also part of the delegation.
Koor Industries - Amiram Fleischer, 972-3-5251115

* TRADE TALKS WITH JORDAN TO BEGIN IN EILAT TOMORROW (23.01.95).
Israeli and Jordanian representatives will be meeting in Eilat tomorrow, Monday, 23.01.95, in order to complete negotiations on a Most Favored Nation Trade Treaty between the two countries. According to Zohar Peri, Director of the Industry and Trade Ministry's Foreign Trade Administration, the central points of an agreement have already been agreed upon and Israel has already submitted a draft MFN proposal. Peri said that the Jordanians have received the draft and are expected to bring their responses to this round of negotiations which Ministry officials hope will end on Wednesday with the signing of an MFN Treaty. Wednesday, 25.1.95, was the deadline set by Prime Minister Rabin and King Hussein during their meeting last week as the date for completing an MFN Treaty. Both sides have already agreed that the MFN Treaty will be asymmetrical, which the Jordanians requested in response to Israel's stronger economy.
Industry and Trade Ministry - Avital Bar, 972-2-220340

COMMUNICATIONS SECTOR:

* ADVERTISING REVENUE OF NIS 325 MILLION DURING FIRST YEAR OF SECOND TELEVISION CHANNEL OPERATIONS.
Advertising proceeds for the three operators of TV's Channel 2 during the first year of its operation were NIS 325 million, or approximately $110 million. Keshet Communications earned advertising revenue of NIS 115 million while the other two operators, Tel-Ad Communications and Reshet Communications each earned proceeds of NIS 105 million. Each of the operators broadcasts two days a week while they take turns broadcasting on the Sabbath. (Ha'aretz, 19.1.95)

ENERGY:

* ISRAEL ELECTRIC CORPORATION WILL BE READY TO JOIN JORDAN'S ELECTRICITY GRID IN EILAT BY JULY 1995.
Following a meeting late last week between officials from Israel Electric Corporation and Jordan Electric Corporation, Israeli officials reported that they would be ready to link Israel's electricity grid in Eilat to that of Jordan in Aqaba in July. According to the officials, Jordan will be ready to link up a few months afterwards. During the meeting, a number of technical issues were agreed upon in order to facilitate electricity transfer between the two cities.
Israel Electric Corporation - Yael Ne'eman, 972-3-5605101

AGRICULTURE:

* ISRAEL BEGINS EXPORTING TOMATOES AND CUCUMBERS TO RUSSIA.
Agrexco has begun exporting fifty tons of cucumbers and tomatoes to Russia every week, according to Shlomo Tirosh, Managing Director of Agrexco. Until recently this was not possible, due to the high prices of these vegetables in Israel. In Europe, Israeli citrus exports increased by 10% and the Ministry reports that there is even more demand which Israeli growers are unable to fill. This inability to supply more produce, according to Danny Kritchman, Chairman of Israeli Citrus Producers, could harm Israel's reputation in supplying future European needs.
Agriculture Ministry - Ronny Hassid, 972-3-6971749

TOURISM: