ECONOMIC SURVEY -GPO- - 24-Apr-95

24 April 1995

MACRO-ECONOMIC NEWS:

* MARCH INFLATION DOWN BY 0.1%
Inflation fell by 0.1% during March, the Central Bureau of Statistics reported. This brings the inflation rate for the first quarter of 1995 to 0.3%, following increases of 0.2% during both January and February. The last negative index was in May 1992, the CBS reported. During March, a number of indices showed drops, mostly due to seasonal reasons, including reductions for fruit and vegetables by 6.1%, of housing by 0.4%, of apartment rentals by 0.7%, and of clothing and footwear by 2.1%. Elements of the consumer price index which rose, included transportation and communications by 1.3%, and tourism prices by 10.5%.

Central Bureau of Statistics - David Neumann, (02)-6553400

* BANK OF ISRAEL REDUCES INTEREST RATE BY 0.8%.
On 24.4.95, Bank of Israel Governor Jacob Frenkel announced the Bank would be reducing the interest rate by 0.8%, to 14%, in May. This marks the third reduction in interest rates the Bank has made since the beginning of 1995. Frenkel announced that the interest rate reduction was made due to the continuing drop in inflation, the continuing moderation in expectations of growth in the future, and the continuing stability of the M1 money supply index.

Bank of Israel - Ohad Bar-Efrat, (02)-552712

* 3% REAL INCREASE IN ECONOMIC ACTIVITY DURING FIRST QUARTER ACCORDING TO FEDERATION OF ISRAEL CHAMBERS OF COMMERCE STUDY.
Economic activity in the trade and import sector rose by 3% in real terms during the first quarter of 1995 compared to the last quarter of1994, according to a study by the Federation of Israeli Chambers of Commerce. The FICC points out that part of the growth in the first quarter of 1995 was due to seasonal factors such as the beginning of purchasing for the Passover holiday. Sectors benefitting from the seasonal factors included household and kitchen goods, clothing and footwear, and cleaning products.

Federation of Israeli Chambers of Commerce - Sara Lipkin, (03)-5631010

* AMOUNT OF CURRENCY HELD BY BANKS AND CONSUMERS ROSE 14% IN 1994.
The Bank of Israel reported that the amount of currency held by the banks and consumers at the end of 1994 was NIS 6.5 billion compared to NIS 5.7 billion at the end of 1993. In real terms, taking inflation into account, the amount of currency held by the public and the banks fell by 0.2%, according to the Bank's Currency Department. The amount of bills in circulation grew by 11 million to 104 million bills with the most popular being the NIS 50 note. The NIS 50 note accounts for 47% of all bills held, while the 10 Agorot coin accounts for 47% of all coins in circulation.

Bank of Israel - Ohad Bar-Efrat, (02)-552712

FOREIGN TRADE:

* ISRAELI TRADE DELEGATION LEAVES MOROCCO EARLY AFTER PRODUCT SAMPLES HELD BY MOROCCAN CUSTOMS AUTHORITY.
A group of seven Israeli industrialists visiting Morocco for an international industrial packaging exhibition returned to Israel after their display materials were held in customs, instead of being released for the exhibition. The industrialists were to have shown their materials at a booth sponsored by the Israel Export Institute. This was to have been the first time Israeli industrialists would have exhibited at an international conference in Casablanca.

Israel Export Institute - Ruti Ovnat, (03)-5101331

PRIVATIZATION:

* INTERNATIONAL INVESTOR GEORGE SOROS TO JOIN CONSORTIUM TO BUY BANK HAPOALIM.
Billionaire international investor George Soros is part of a consortium bidding to acquire controlling interest in Bank Hapoalim from the Government. Soros is part of the Claridge Israel group bidding for the bank. According to Telegraph (23.4.95), Soros, Claridge Israel, Israeli billionaire Ted Arison, and the US investment bank Goldman Sachs are the four largest partners in the consortium which also includes Dovrat Shrem & Co., the US-Canadian-Israeli Renaissance Fund, US communications industry leader Larry Tish, Osem, Delta Galil, and local investor Michael Levy of Nirlat. The other group bidding for control of the bank includes Eliezer Fishman, US investment bank Bear Stearns, and the diamontaire Steinmintz family. (Telegraph 23.4.95).

DEFENSE INDUSTRIES SECTOR:

* US DEPARTMENT OF DEFENSE ACCEPTS FIRST ISRAEL AIRCRAFT INDUSTRIES/TRW UNMANNED AERIAL VEHICLE.
Israel Aircraft Industries (IAI) reported that the US Department of Defense accepted the first of seven "Hunter" tactical Unmanned Aerial Vehicle systems on 14.4.95. The system is scheduled to be transferred to the US Army at the end of April, IAI reported. The other six systems are expected to be delivered to the US DOD by September 1995, according to IAI.

Israel Aircraft Industries - Doron Suslik, (03)-9358509

PEACE ECONOMY:

* INTERNATIONAL CONFERENCE ON JORDAN VALLEY DEVELOPMENT PROJECTS.
A three day international conference on Jordan Valley Development Projects beginning 24.4.95 is being held in Amman, the Foreign Ministry announced. Foreign Minister Peres and Jordan's Water Minister opened the conference sponsored by the US Trade and Development Agency and attended by US, Israeli, and Jordanian officials and private sector representatives. The conference's agenda includes infrastructure development, telecommunications, water, energy, and environmental projects.