ECONOMIC SURVEY - 21-Feb-96

21 February 1996

(COMMUNICATED BY GPO ECONOMICS DESK)

MACRO-ECONOMIC SECTOR:

* INFLATION RISES BY 0.9% IN JANUARY 1996.
Israel's Consumer Price Index rose by 0.9% during the first month of 1996, the Central Bureau of Statistics reported. General food prices (excluding fruit and vegetable prices, which fell by 3.5%) rose by 1% during the month. Housing prices rose by 1.5%, furniture prices were up by 0.7%, housing maintenance prices rose by 2.1%, transportation and communication prices rose by 2.1%, and health sector costs were up by 2.3%. During the month, clothing and shoe prices fell by 4.2%.
Central Bureau of Statistics - David Neumann, 972-2-6553400

* EMPLOYMENT OF WOMEN IN HIGH TECH SECTOR LOWER THAN GENERAL INDUSTRIAL LEVEL.
Women constitute 10% of all high tech employees in Israel, compared to constituting 25% of employees in the entire industrial sector, the Ministry of Industry and Trade announced. 12% of R&D managers and 11% of marketing managers within industry are women, according to the ministry's survey. Within Israel's industrial sector, most women are employed in the food, textile, and cosmetics sectors at minimum wages.
Industry and Trade Ministry - Ayal Fabian, 972-2-220389

PRIVATE SECTOR:

* CLAL TO ACQUIRE 50% OF YOTVATA DAIRIES FOR APPROXIMATELY NIS 100 MILLION.
Clal Industries, a subsidiary of Clal Israel, has signed an agreement with Kibbutz Yotvata in the Arava to acquire 50% of the its dairy industries for close to NIS 100 million. Yotvata holds approximately 3% of country's milk sales, though its market share for yogurt and milk products has been estimated at close to 36%. The acquisition, following Clal's acquisition of equity in Sunfrost and Jafora-Tabori, continues Clal's strategic initiative of diversifying into the food sector. (Globes, 18.2.96, p.1)

GOVERNMENT SECTOR:

* BANK OF ISRAEL GOVERNOR PROF. JACOB FRENKEL: GOVERNMENT NEEDS TO BETTER DEVELOP MULTI-YEAR ECONOMIC STRATEGY TO CONTINUE STABILITY AND GROWTH.
The Israeli government needs to better develop its multi-year plans for dealing with inflation, trade liberalization, foreign currency reforms, unemployment, and national savings, if it is to continue stable economic growth into the next century, Bank of Israel Governor Prof. Jacob Frenkel said. The target for inflation is the European level of between 3-4%, according to Frenkel, and a policy agenda needs to be set to reach this point. Frenkel also pointed out that the national budget needs to be consistent with the Government's strategy for economic growth. Regarding trade liberalization, Frenkel said that Israel has been successful in gradually removing trade barriers, and as a result, Israeli industry has benefitted. A number of, "clouds are on the horizon," he said, referring to Israel's rising current accounts deficit, balance of trade deficit, and falling national savings. Frenkel also expressed disappointment that privatization, especially of the banks, was going more slowly than expected.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712

PEACE ECONOMY:

* INTERNATIONAL AGRICULTURE CENTER TO BE ESTABLISHED IN GAZA.
An agreement for establishing an international agricultural center for salt water agriculture in Gaza, was signed by Israel, Luxembourg, Morocco, and the Palestinian Authority on 14.2.96. The center will be established on a 50-dunam site in the Beit Hanoun area with an investment of $4.5 million, of which $1 million is Luxembourg's contribution. The center is the product of the water issues group in the multilateral negotiations framework and will focus on technologies for greenhouse growing of vegetables using various types of water; training of manpower; and regional scientific cooperation in the field.
Foreign Ministry - Danny Shek, 972-2-303343

FOREIGN TRADE:

* ISRAEL AIRCRAFT INDUSTRIES' MLM FACTORY AWARDED TELECOMMUNICATIONS NETWORK IN POLAND.
Israel Aircraft Industries' MLM factory, part of the concern's electronics division, was awarded a contract worth $5.5 million to establish telecommunications infrastructure in the Pila region of Poland. The work will be done for RP Telekom, which consists of Israel's Dankner Investments, and Shamrock and Goldman-Sachs from the U.S., and which is responsible for creating and running telecommunications services in the area.
Israel Aircraft Industries - Doron Suslik, 972-3-9358541

DELEGATIONS:

* HEAD OF ITALIAN MANUFACTURERS ASSOCIATION TO BE GUEST OF ISRAEL MANUFACTURERS ASSOCIATION.
Luigi Abete, the head of Italy's Manufacturers Association, will lead a delegation of 26 Italian industrialists beginning 25.02.96. During the visit, he will sign a memorandum promoting industrial cooperation between Italy and Israel with the head of Israel's Manufacturers Association, Dan Propper. The group will also meet with senior government officials during the visit. Israeli exports to Italy in 1995 were $563 million, while imports from Italy were $2.2 billion.
Manufacturers Association - Oded Ben Ami, 972-3-5198800

ENERGY SECTOR: