ECONOMIC SURVEY - 29-Oct-96

29 October 1996

(Communicated by GPO Economics Desk)

MACRO-ECONOMIC SECTOR:

* FINANCE MINISTRY: GDP GROWTH TO REACH 4% IN 1996.
Finance Ministry Director-General David Brodet said that Israel's gross domestic product (GDP) would grow by 4% this year. He said that earlier forecasts of GDP growth of 5% turned out to be incorrect because of exogenous factors such as the terrorist attacks in February and March and the resulting closure of the territories, and operation "Grapes of Wrath". He also noted the fact that the shekel appreciated during the year, thereby hurting exporters' profits. All of these factors hurt the ability of Israeli firms to sell to Palestinian markets, and hurt the tourism industry, according to Brodet. Finance Ministry State Revenue Administration Director Tzippi Gal-Yam added that tourism will likely be down by 15-20% this year.
Finance Ministry - Eli Yosef, 972-2-5317201

* ISRAEL'S GDP TO REACH $100 BILLION AND GDP PER CAPITA TO REACH $17,000, IN 1997.
Israel's Gross Domestic Product will reach $100 billion and GDP per capita will reach $17,000 in 1997, according to Finance Ministry Director-General David Brodet. He said that Israel's economy remains healthy, and that as long as the proper fiscal and monetary measures are taken, the economy will be able to grow by 5% annually from 1998 through 2000.
Finance Ministry - Eli Yosef, 972-2-5317201

* AUGUST AND SEPTEMBER INDICATORS SHOW ECONOMIC STABILITY.
Economic indicators published by the Central Bureau of Statistics for the months of August and September show no evidence of the economic slowdown that was recorded during the first seven months of the year. Exports rose at an annual rate of 7% during these two months, as compared to an annual rate of 3-5% during the first seven months of the year, while consumer demand as marked by retail sales rose at by 9-10% in June- September. In September, there was an increase in the import of investment inputs by factories, following decreases from April through August, while the industrial production index in August rose at an annual rate of 4%, as compared to 2-3% in April-July.
Central Bureau of Statistics - David Neumann, 972-2-6553400

* BANK OF ISRAEL REDUCES INTEREST RATE BY 0.3%.
On 28.10.96, the Bank of Israel reported that it was reducing the interest rate on resources it offers to the commercial banks by 0.3% as of November 1. Since August, the central bank has reduced the interest rate by a total of 1.8%. The Bank reported it was taking this moderate move due to varied economic indicators. The Bank said that while the inflation rate for the past three months has been low, the annual inflation rate still remains higher than the government's target level and that inflationary expectations although stable are still higher than the target level. The Bank reported that the current economic slowdown allows it to take a moderate monetary policy without hurting the efforts to rein in inflation.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712

* INDUSTRIAL EXPORTS FORECAST TO INCREASE BY 5% IN 1996.
Industrial exports are forecast to increase by 5% in 1996, due to an average monthly increase of 0.3%, the Central Bureau of Statistics reported. In 1995, industrial exports rose by 8.5%.
Central Bureau of Statistics - David Neumann, 972-2-6553400

GOVERNMENT SECTOR:

* NO REDUCTION OF FOREIGN COMPANIES' INTEREST IN INVESTING IN ISRAEL.
There has been no reduction of interest by foreign firms regarding investing in Israel, the Industry and Trade Ministry states, based on reports by Israel's economic representatives abroad. The economic representatives say that conferences, trips and discussions with foreign companies and potential investors interested in Israel have not been cancelled or scaled back in the wake of recent events. Visits by business people from Osaka, Japan; Movenpick of Switzerland; LeClerc of France; CDC from Taiwan; business people from Moscow; and executives from the Bank of America point to vigorous interest in Israel, according to Industry and Trade Minister Natan Sharansky.
Industry and Trade Ministry - Haya Peri, 972-2-6220340

PRIVATE SECTOR:

* HIGH-TECH DELEGATION TO VISIT GREAT BRITAIN.
A delegation of executives from Israel's high-tech industry will visit Britain from 28-30 October in order to examine possibilities for joint cooperation with British firms. Israeli firms participating in the delegation will include among others ECI Telecom, Rafael, Elscint, Israel Aircraft Industries, and Rad Data Communication. They will meet with firms such as Cable & Wireless, GEC-Sensors, GEC-Marconi, Thomas Cook, and British Aerospace. The visit is in the framework of the activities of the Israel-British Economic Council, which is sponsored by the Industry and Trade Ministry.
Industry and Trade Ministry - Haya Peri, 972-2-6220340