ECONOMIC SURVEY
28 September 1995
(COMMUNICATED BY GPO ECONOMICS DESK)
MACRO-ECONOMIC NEWS:
* BANK OF ISRAEL RAISES INTEREST RATES BY 0.5%.
The Bank of Israel will raise by 0.5% the interest rates on financial
resources which it provides to the banking sector by 0.5%, it announced on
21.9.95. This is the first time since November 1994 that the Central Bank
reported that it would raise interest rates. The Bank announced it was
taking this step in response to a number of trends: rising inflation,
falling real interest rates, and a rapidly expanding money supply (M1).
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712
*NET ISRAELI INVESTMENTS IN FOREIGN FINANCIAL AND REAL PROPERTIES WAS $78
MILLION DURING FIRST HALF OF 1995.
Net Israeli investments in foreign financial instruments and real property
during the first half of 1995, was $78 million, the Bank of Israel
reported. Israeli investments in foreign-traded securities was $319
million, while Israeli investments in real property was $241 million.
Investments in shares of Israeli companies traded abroad was $183 million,
with the remaining $136 million invested in foreign companies traded
abroad. The Central Bank reported that the value of Israeli investments in
shares traded abroad was $1.73 billion, compared to $1.69 billion at the
end of 1994.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712
*CURRENT ACCOUNTS BALANCE OF PAYMENTS DEFICIT GROWS TO RECORD $2.5 BILLION
DURING FIRST HALF OF 1995.
Israel's current accounts balance of payments deficit was $2.5 billion at
the end of the first half of 1995, compared to $2.2 billion in the
corresponding period in 1994, the Central Bureau of Statistics reported.
The deficit during the second quarter, $1.37 billion, was lower than that
of the first quarter, which was $1.51 billion. A primary reason for the
decline in the deficit during the second quarter were unilateral transfers
of $400 million from the United States.
Central Bureau of Statistics - David Neumann, 972-2-6553400
PEACE ECONOMY:
* CONFERENCE TO DRAFT PRINCIPLES FOR LINKING REGIONAL ELECTRICITY GRIDS.
Delegates from Israel, Egypt, Jordan, and the Palestinian Authority began
discussions of a document formulating principles for the linking of the
region's electricity grids, at a conference in Zichron Ya'akov, on
27.9.95. Representatives of the European Community are also participating
in the meeting, because the final document will be used as the basis for
an international tender to be underwritten by the EU.
Israel Electric Corporation - Yael Ne'eman, 972-3-5605101
FOREIGN TRADE:
* ISRAEL TO ESTABLISH HIGH TECH INDUSTRIAL ZONE IN CHINA.
Negotiations between Israel and China on establishing an industrial zone
are progressing,Industry and Trade Minister Micha Harish and China's
Foreign Trade and Economic Cooperation Minister Wu Yi noted. According to
Harish, cooperation on the project between Israel's public and private
sectors will be coordinated by the Ministry's Director-General Yossi Snir
and Elbit President Emmanuel Gill. The zone, intended primarily for
establishing high technology-based joint ventures, will be located in
Tianjin, close to Beijing. Harish also said, that during the visit of
Minister Wu, a set of financial protocols between the two countries, has
been initialed, making it easier for Israeli firms to do business in
China. As an incentive, the government is establishing a $150 million
credit line to provide financial assistance to Israeli concerns conducting
business in China.
Industry and Trade Ministry - 972-2-220340
* JAPAN EXPORT AND TRADE ORGANIZATION TO OPEN OFFICE HERE.
Japan's Prime Minister Tomiichi Murayama announced that Japan would open
an office of Jetro Japan's Export and Trade Organization. Murayama made
the announcement during his visit, 16-18.9.95, the first state visit by a
Japanese Prime Minister. The opening of the export organization's office
will make it easier for Japanese firms to enter the Israeli market, and is
designed to strengthen economic ties between the two states.
Prime Minister's office - Ilan Flatto, 972-2-705555
PRIVATIZATION:
* GOVERNMENT COMPANIES AUTHORITY REPORTS HIGHER PROFITS IN 1994.
In its annual report for 1994, the Government Companies Authority,
responsible both for overseeing companies in which the Government has
interests, and for privatization, reported that government-related
companies showed higher profits in 1994. The GCA showed a profit of NIS
143 million, after taking into account severance plans for workers at
companies involved in reorganization programs, compared to losses of NIS
1.13 billion in 1993, and NIS 152.9 million in 1992. The GCA reported that
return on equity from its companies rose to 4.6%, up from 3.4% in 1993,
and that exports grew by 3.8% in real terms in 1994. The GCA also reported
that government-related companies accounted for 15.5% of economic activity
in the general economy in 1994, down from 15.9% in 1993.
Finance Ministry - Eli Yosef, 972-2-317201