ECONOMIC SURVEY - 29-Aug-96

29 August 1996

(COMMUNICATED BY GPO ECONOMICS DESK)

MACRO-ECONOMIC SECTOR:

* APARTMENT BUILDING STARTS DOWN DURING FIRST HALF OF 1996.
Apartment building starts were down by 11% in the first half of 1996, as compared to the second half of 1995, and were down by 36%, as compared to the first half of 1995, according to the Central Bureau of Statistics. The primary reason for the decline was a drop in public apartment building starts, which fell by 14%, as compared to the second half of 1995, and by 56% compared to the first half of 1995. However, building completions for apartments rose by 3%, as compared to the second half of 1995, and by 45%, as compared to the first half of 1995.
Central Bureau of Statistics - David Neumann, 972-2-6553400

* PUBLIC HOLDINGS IN COMPANIES TRADED ON TEL AVIV STOCK EXCHANGE FALLS.
The public's holdings of equity in companies traded on the Tel Aviv Stock Exchange fell by 1.5% to 32.5% in June 1996, as compared to 34% in 1994-95, the Tel Aviv Stock Exchange reported. An increase in share purchases by large shareholders both new and old was primarily responsible for the drop in public holdings, the bourse reported. The public holds less than 25% in approximately half of the companies whose shares are traded in Tel Aviv, according to the bourse.
Tel Aviv Stock Exchange - Etti Tuttnaur, 972-3-5677405

* 70% OF ECONOMIC LEADERS BELIEVE ECONOMY WILL SLOW IN SECOND HALF OF YEAR.
70% of more than 100 economic leaders polled by the Federation of Israeli Chambers of Commerce said that economic activity will slow during the second half of 1996, while 15% believed that economic activity would stay the same. 88% of the respondents thought that some sort of devaluation of the shekel was necessary, with 73% believing that a devaluation of more than 3% was needed. The survey was taken by the FICC in July.
Federation of Israeli Chambers of Commerce - Roni Reiber, 972-3-5631010

GOVERNMENT SECTOR:

* BANK OF ISRAEL PURCHASES GOVERNMENT BONDS IN "SAFETY NET" ACTION.
On 26.08.96, and again on 29.08.96, the Bank of Israel purchased government bonds as part of its "safety net" program. On 26.08.96, the central bank purchased NIS 250 million worth of bonds at the market price, while on 29.08.96, the bank purchased NIS 150 million of government bonds. The central bank reported that on 26.08.96, NIS 354 million worth of bonds were offered at the market price by members of the Tel Aviv Stock Exchange, while NIS 900 million worth of bonds were offered at a price higher than the market price. On 29.08.96, offers of NIS 267 million worth of bonds were made with only NIS 150 million fitting the central bank's criterion. The central bank will only purchase bonds at the market price or lower.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712

* PRIME MINISTER MEETS WITH PRESIDENT OF MATRA TRANSPORT INTERNATIONAL.
Prime Minister Benjamin Netanyahu met with the President of Matra Transport International, the French railway company, on 21.08.96. During the meeting, Matra's President, Frederick Dassault, told the Prime Minister that the company is willing to invest in Israel and is particularly interested in the Tel Aviv subway project.
Prime Minister's Office - Shai Bazak, 972-2-705465

* NEGOTIATIONS TO OPEN ON IMPROVING TRADE AGREEMENT WITH JORDAN.
Industry and Trade Minister Natan Sharansky told Jordanian Ambassador to Israel Omar Rifai, that his ministry intends to reopen negotiations with the Jordanians in the very near future. This will be done in order to improve the trade conditions previously set by the October 1995 Israel- Jordan trade treaty. The new negotiations will work towards improving Jordan's ability to trade with the Palestinian Authority, improving time factors at border crossings, and reducing duties and increasing customs benefits.
Industry and Trade Ministry - Haya Peri, 972-2-220340

PRIVATIZATION:

* GOVERNMENT PRIVATIZATION PLAN TO BE READY IN OCTOBER/NOVEMBER.
The government will present a new comprehensive program for privatization in October/November, said Moshe Lion, Senior Deputy Director-General in the Prime Minister's Office with responsibility for privatization. Lion said that privatization would take place via a number of different methods including share offerings both locally in Tel Aviv and internationally, and the sale of controlling equity through tenders. Lion said that the options voucher program proposed by the previous government and the Finance Ministry is currently not under consideration, though this does not mean that in the future the sale of a company via this method will not occur.
Prime Minister's Office - Shai Bazak, 972-2-705465

PRIVATE SECTOR:

* EIGHT ISRAELI FIRMS CHOSEN TO TAKE PART IN EUROPEAN UNION RESEARCH & DEVELOPMENT PROJECTS.
The Ministry of industry and Trade has announced that eight Israeli firms have been chosen to participate in the European Union's Fourth Framework R&D programs. This is the first time that Israeli companies are joining the R&D projects, following the signing of the new EU-Israel Free Trade Agreement last year. Established Israeli companies, such as El-Op, will participate, as well as start-up firms such as Nano-Mushan, which began as a project in a technological incubator for Russian new immigrants.
Industry and Trade Ministry - Haya Peri, 972-2-220340

FOREIGN TRADE:

* ISRAEL AIRCRAFT INDUSTRIES TO SUPPLY U.S. AIR NATIONAL GUARD.
Israel Aircraft Industries reported that its Astra SPX commercial jet has been chosen for supply to the U.S. Air National Guard. IAI, acting as a sub-contractor, will supply two of these ASTRA jets to Tracor Flight Systems, which is the main contractor. The contract has an option for the purchase of two more ASTRA jets.
Israel Aircraft Industries