ECONOMIC SURVEY - 23-Jul-96

ECONOMIC SURVEY

(COMMUNICATED BY GPO ECONOMICS DESK) July 23, 1996

PRIVATE SECTOR:

* NESTLE PAYS $140 MILLION TO ACQUIRE 25.2% OF OSEM.
The giant multinational food concern, Nestle, has acquired 25.2% of Osem's shares for $140.3 million, thus bringing its holdings in the Israeli food concern to 39.7%, and making it the company's largest shareholder. Nestle purchased the shares from Claridge Israel and the Renaissance Fund, completing the deal on 18.07.96. Also during last week, Nestle exercised its option to acquire 10% of Osem for $40 million. Osem's market value according to the deal is $558 million, 23% higher than what its shares are traded for in Tel Aviv.
Osem - Dan Propper, 972-3-6951869

* CONSTRUCTION CONTRACTS FOR ISRAELI-EGYPTIAN OIL REFINERY SIGNED.
Middle East Oil Refineries (MIDOR), the joint Israeli-Egyptian oil refinery project, took another step forward on 21.07.96 when Yossi Maimon's Merhav Group and Egypt's Hussein Salem Group and the Egyptian General Petroleum Company, signed construction agreements worth approximately $1.2 billion with a number of international construction concerns. The refinery, to be located in Alexandria, will be built by Italy's Technipetrol and France's Technip, while refining technologies will come from America's Conoco-Bechtel and UOP. The refinery will be able to produce 100,000 tons of crude oil annually, and ground-breaking is expected in October 1996.
Merhav Group - Dr. Nimrod Novik, 972-9-501735

* ORMAT WINS TENDER TO BUILD GEOT
HERMAL ELECTRICITY GENERATING PLANTS IN ETHIOPIA. Ormat, based in Yavne, is the winner of an international tender to build two geothermal electricity production plants for the local electricity corporation in Ethiopia. The investment for the two plants is estimated at $16 million. (Globes, 19.07.96, p.7)

MACRO-ECONOMIC SECTOR:

* INFLATION RATE IN JUNE INCREASES BY 0.7%.
The Consumer Price Index rose by 0.7% during June, pushing the inflation rate for the first half of 1996 to 7.0%, the Central Bureau of Statistics reported. During the month, fruit and vegetable prices fell by 7.7%, while food prices were up by 1.6%, apartment prices by 1.1%, health costs by 1.6%, and transportation and communications by 1.2%.
Central Bureau of Statistics - David Neumann, 972-2-6553400

* RETAIL CHAIN STORE SALES CONTINUE TO SLOW IN MAY AND JUNE.
Sales in retail chain stores grew by only 0.5% on average in May and June, compared to an average monthly growth of 0.9 in March and April, and 1.2% during February and January, the Central Bureau of Statistics reported. Growth in food sales in the retail chain stores also slowed down for the past two months to 0.5% monthly, compared to 1.0% in March and April, and 1.5% in January and February. Sales in retail stores account for 25% of all private consumption, and constitute 30% of all food sales.
Central Bureau of Statistics - David Neumann, 972-2-6553400

* MONEY SUPPLY UP SLIGHTLY IN JUNE BY 0.1%.
The M1 money supply index rose by 0.1% in June, following a drop of 0.8% in May, the Bank of Israel reported. For the first half of 1996, the M1 expanded by 5.5%.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712

GOVERNMENT SECTOR:

* BANK OF ISRAEL TO INTERVENE IN BOND TRADING TO STABILIZE MARKET.
On 23.07.96, the Bank of Israel is planning to intervene in the government bond market in order to stabilize prices which have been falling sharply since late April 1996. The Bank is expected to buy approximately NIS 500 million worth of bonds in order to stem the drop in prices. In order to balance the injection, the Bank is also planning to sell more Treasury Bonds (Makam) at a later date.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712

* INDUSTRY AND TRADE MINISTER SHARANSKY TO VISIT U.S. AND CANADA.
Industry and Trade Minister Natan Sharansky will leave for a trip to Washington and to Canada on 28.07.96. The purpose of his trip, in addition to becoming acquainted with trade officials in both countries, will be to complete negotiations and sign a free trade treaty with Canada and participate in a meeting of the United States-Israel Science and Technology Commission.
Industry and Trade Ministry - Dor Marom, 972-2-220389

TOURISM SECTOR: