ECONOMIC SURVEY - 18-Apr-96

18 April 1996

(Communicated by GPO Economics Desk)

MACRO-ECONOMIC SECTOR:

* ESTIMATED COST OF "GRAPES OF WRATH" IN HUNDREDS OF MILLIONS OF SHEKELS.
The cost of the current "Grapes of Wrath" military operation in northern Israel and Southern Lebanon is estimated to be in the hundreds of millions of shekels. It is anticipated that in the next several weeks, the Defense Minister will make a supplementary budget request in order to cover these costs, despite the position of the Finance Ministry that the Defense establishment should absorb the bulk of the costs as part of its current budget. (Davar Rishon, 17.4.96, p.1)

* TOTAL DAMAGE FROM KATYUSHA FIRE IS APPROXIMATELY NIS 50 MILLION; DIRECT DAMAGE NIS 13.5 MILLION, INDIRECT DAMAGE NIS 40 MILLION.
Estimated damages from Katyusha fire as of 16.4.96 was close to NIS 50 million, with direct damages being estimated at approximately NIS 13.5 million and indirect damage being measured at approximately NIS 40 million. In order to assist the regional authorities on the confrontation line, on 16.4.96, the Interior Ministry transferred NIS 20 million to communities in the North to cover deficits. (Globes, 17.4.96, p.1, Ha'aretz, 17.4.96, p.C2)

* SLIGHT INCREASE IN ECONOMIC ACTIVITY DURING FIRST QUARTER OF 1996.
Economic growth was up slightly during the first quarter of 1996, according to a nationwide survey by the Bank of Israel. After discounting seasonal factors indicating growth, industrial and commercial concerns showed stability. This is in contrast to the positive growth they experienced in each quarter of the past four years. Smaller and medium sized industrial and commercial firms showed a drop in activity, while larger firms reported slight growth. The construction, transportation, and communications industries reported economic stability. However, subcontractors dependent upon the construction industry reported a slowdown due to the closure. The hotel industry reported solid growth during the quarter, since it is anticipated that most of the negative consequences of the February and March terrorist attacks will be absorbed during the second quarter and remainder of the year.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712

PRIVATE SECTOR:

* DAMAGES TO INDUSTRIAL SECTOR ON CONFRONTATION LINE ESTIMATED AT NIS 15 MILLION.
Both direct and indirect damage to the industrial sector on the confrontation line in the country's North is estimated at close to NIS 15 million, according to a 16.4.96 survey, by the Israel Manufacturers Association. In order to alleviate the situation, the association is calling for the government to allow 50% of the workers in small and medium sized concerns to return to work so that further damage can be avoided.
Manufacturers Association - Oded Ben-Ami, 972-3-5198800

* TEL AVIV STOCK EXCHANGE OPENS INTERNET SITE.
The Tel Aviv Stock Exchange has opened up an internet site in order to improve its foreign investor relations. The site www.tase.co.il will post daily trade results, trade method explanations, and a short review of the TASE's history.
Tel Aviv Stock Exchange - Etty Tuttnauer, 972-3-4577405

DEFENSE INDUSTRIES SECTOR:

* PLAN TO DEEPEN ISRAELI-BRITISH DEFENSE INDUSTRY COOPERATION.
This past week British Defense Minister Michael Portillo met with Prime Minister Shimon Peres and discussed strengthening cooperation in the defense industries field. Portillo told Peres that the potential for broadening economic-defense ties between the countries exists and that a number of firms in both countries are planning to make bids for government tenders. (Globes, 17.4.96, p.14)

GOVERNMENT SECTOR: