ECONOMIC SURVEY - 01-Mar-98

March 1, 1998

(COMMUNICATED BY GPO ECONOMICS DESK)

MACRO-ECONOMIC SECTOR:

* INDUSTRIAL PRODUCTION UP BY 2% IN 1997
Israel's industrial production rose by 2% in 1997, according to the Central Bureau of Statistics. This was the lowest rise in industrial production since 1990. During the first half of the year, industrial production was up by an annual rate of 3%, but during the second half of the year it rose by 1% only. Production in the electronic components sector rose by 17%, telecommunications sector by 12% and the tobacco, food, and drink sector by 3%. The sectors showing the largest drops were in the light industries such as leather, textiles and clothing which fell by almost 6%. From 1990-1995, industrial production rose at an annual rate of 6.8%, and in 1996 the rate was 5.5%.
(www.cbs.gov.il)
Central Bureau of Statistics - David Neumann, 972-2-6553400

* BANK OF ISRAEL: STOCK EXCHANGE GROWTH REFLECTS LONG-TERM PROSPECTS
The Tel Aviv Stock Market indices rose by 26% during 1997, despite the general economic slowdown, most likely due investors expectations of long-term economic prospects, according to the Bank of Israel. Investors expect that inflation will decrease causing a drop in real and nominal interest rates; that the country's economic structure will improve due to further reforms and privatization; and that human capital will be further utilized improving the country's economic situation. The percentage of holdings by foreign investors rose to 11% at the end of 1997, compared to 9% a year earlier. These investments were a factor aiding the stock market's rise over the past year.
(www.bankisrael.gov.il)
Bank of Israel - Gabi Fishman, 972-2-6552712

* COMMERCIAL AND SERVICES SECTORS REVENUE INCREASE BY UNDER 1% IN 1997
Revenues of Israel's commercial and services sectors including wholesale and retail sales, food and guest services, and business services

rose by just under 1% in 1997, the Central Bureau of Statistics reported. Guest, food services and wholesale sales remained stable, whereas retail sales rose by 1%. Computer services rose by 16% as opposed to real estate services which fell by 11% during the year. Communications services, which are not included in the index, rose by 18% during 1997.
(www.cbs.gov.il)
Central Bureau of Statistics - David Neumann, 972-2-6553400

FOREIGN TRADE:

TAIWAN'S DEPUTY ECONOMIC MINISTER VISITS ISRAEL.
Taiwan's Deputy Economic Minister Li Fu Lin arrived in Israel last week for a round of talks with Israeli officials to improve trade relations between the two nations. Israel, whose exports to Taiwan rose by 51% in 1997 to $201 million, primarily exports chemicals, medical equipment and machinery to Taiwan, and imported from it $352 million worth of goods in 1997, an increase of 4%, including machinery, plastics and rubber goods and textiles.
(www.tamas.gov.il)
Industry and Trade Ministry - Haya Peri, 972-2-6220340

* FOREIGN MINISTRY HOLDS SEMINAR ON TRADE WITH LATIN AMERICA
On 23 February, the Foreign Ministry, in conjunction with trade organizations, held a seminar on ways to increase trade between Israel and Latin America. In 1997, trade with Latin America amounted to approximately $800 million, about 4% of Israel's total trade. The ministry held the seminar in order to make exporters more aware of the large markets in that part of the world in light of the current economic crisis in South East Asia and the Free Trade Area agreement currently being negotiated between Israel and Mercosur nations. In addition Israel is negotiating with Mexico and Chile on FTA agreements, and the Argentine Economic Minister Dr. Fernandez begins his visit tomorrow (4.3.98).
(www.mfa-israel.gov.il)
Foreign Ministry - Aviv Shir-On, 972-2-5303343