ECONOMIC SURVEY - 28-Dec-95

28 December 1995

(COMMUNICATED BY GPO ECONOMICS DESK)

MACRO-ECONOMIC NEWS:

* BANK OF ISRAEL LOWERS INTEREST RATES BY 0.5%.
The Bank of Israel lowered interest rates by 0.5% on financial resources which it provides to the banking sector, it announced on 25.12.95. The bank reported it was able to take this step following a reduction in inflation and on the prognosis for moderate inflation in the future. The Central Bank also reported that the country's money supply has expanded from the beginning of the year, consistent with economic activity and the target inflation rate. Bank of Israel Governor Prof. Jacob Frenkel made clear that the country's economic situation high consumption rate, lowering of unemployment and large balance of payments deficit required the bank to continue its policy of monetary restraint.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712

PEACE ECONOMY:

* JUDEA AND SAMARIA GROSS DOMESTIC PRODUCT INCREASED BY 15% ANNUALLY IN 1993 AND 1994.
The GDP of Judea and Samaria rose by an annual rate of 15% during 1993 and 1994, compared to 1991 and 1992, the Central Bureau of Statistics reported. The increase was mostly due to an increase in the construction sector and expansion of the industrial base. The value of the area's GDP the net value of services and goods produced within Judea and Samaria equalled 3% of Israel's GDP; taking into account buying power differences, it equalled 5% of Israel's GDP. With additional revenues received from Palestinians working within Israel and transfers from abroad, the GDP in Judea and Samaria rose by 10% during 1993 and 1994 compared to 1991 and 1992. The reason for this being lower is that fewer Palestinians from Judea and Samaria worked in Israel in 1993 and 1994, compared to 1991 and 1992. From the second quarter in 1994, statistics from the Jericho area were not included due to the beginning of its inclusion in the Palestinian Authority.
Central Bureau of Statistics - David Neumann, 972-2-6553400

FOREIGN TRADE:

* KAZAKHSTAN PRESIDENT LEADS DELEGATION TO ISRAEL.
There are a number of economic elements to the visit of Kazakhstan President Nursultan Nazarbaev, and a delegation of high-ranking Kazakh officials, from 26-28.12.95. During the visit, the Israel Foreign Trade Insurance Corporation (IFTRIC), responsible for insuring Israeli business deals abroad, announced that it was insuring an Israeli engineering firm for $15 million over 5 years in a project to upgrade Kazakhstan's oil refinery. In the industrial sphere, Merhav reported that it would invest approximately $60 million to build a number of industrial complexes for food processing and agriculture production. During his visit, Nazarbaev will sign an investment encouragement accord. (Globes, 27.12.95, p.3)

* CIRCLE K AND 7 ELEVEN CONVENIENCE STORES CLOSER TO OPENING IN ISRAEL.
An Israeli firm, Go N, has received the franchise to operate Circle K convenience stores. A representative of the firm, with 2,460 stores in the U.S. is expected to arrive in Israel to survey sites for establishing its stores. 7 Eleven, another large American convenience store chain, is sending a representative in mid-January to continue negotiations with Sonol and to inspect sites for its chain of stores to be opened in Israel.

(Globes, 26.12.95, p.3)

* ISRAEL-EU INITIAL AGREEMENT TO ALLOW ISRAELI FIRMS TO PARTICIPATE IN EU GOVERNMENT PROCUREMENT TENDERS.
On 22.12.95, Israel and the EU initialed an agreement allowing Israeli firms to participate in EU government procurement tenders. Industry and Trade Minister Micha Harish said that the agreement was primarily intended for Israeli firms to participate in telecommunications tenders in which they hold relative advantages. The ministry said that Israel had not given up its right to demand buy-back agreements on Israeli government tenders which European firms win, in this agreement.
Industry and Trade Ministry - Ayal Fabian, 972-2-220389

GOVERNMENT SECTOR:

* IMPORTED FROZEN MEAT PRICE CONTROLS CANCELLED.
On 26.12.95, the Government decided to abolish price controls on imported frozen meat which had been in place as part of the Government's move to privatize the meat imports industry begun in 1994. Some 40,000 tons of frozen meat, are imported annually, primarily from South America, while local production of meat is 20,000 tons. The move was taken following increased competition in the sector, which has led to the availability of higher quality products, and the proper conditions for cancelling the controls.
Agriculture Ministry - Ronny Hassid, 972-3-6971749