ECONOMIC SURVEY - 03-Jun-98

June 3, 1998

(COMMUNICATED BY GPO ECONOMICS DESK)

GOVERNMENT SECTOR:

* FINANCE MINISTRY TO EXPEDITE SALE OF CONTROLLING INTEREST IN ISRAEL DISCOUNT BANK
The government is expediting the sale of its holdings in Israel Discount Bank and will offer a 53% stake in the bank to investors, according to Finance Minister Ya'akov Ne'eman. On 2.6.98, the minister ordered MI Holdings, which oversees the privatization of government owned banks, and the Finance Ministry to move quickly in the next few weeks to meet with potential buyers in order to sell off government holdings by the end of 1998. The government currently holds 60% of Israel Discount Bank shares.
(www.mof.gov.il)
Finance Ministry - Eli Yosef, 02-5317201

* EL-AL PRIVATIZATION PLAN APPROVED BY CABINET COMMITTEE
El Al Israel Airlines' privatization plan for reducing the government's holdings was unanimously approved by the Inter-ministerial Committee on Privatization on 1.6.98. The plan calls for offering 49% of the shares on the Tel Aviv Stock Exchange or selling a major share in the company in tandem with raising funds for the company via the exchange. Establishment of the State's Golden Share (to ensure the national interest in emergency times) will be set and approved at a separate discussion before the offering. After the offering, the ban on flights on Jewish holidays and the Sabbath will remain in effect.
(www.mof.gov.il)
Government Companies Authority - Tzippi Livni, 02-6707150

MACRO-ECONOMIC SECTOR:

* UNEMPLOYMENT REACHES 8.4% OF WORK FORCE Israel's unemployment rate rose to 8.4% at the end of the first quarter of 1998, the Central Bureau of Statistics reported. Seasonally adjusted figures show that 189,000 people are currently unemployed and seeking work. During this period, the work force rose by 3.4% to include 53.4% of the country's population. (www.cbs.gov.il)
Central Bureau of Statistics - David Neumann, 02-6533400

*FOREIGN INVESTORS' SECURITIES HOLDINGS IN ISRAEL REMAIN STEADY Foreign investors' holdings of Israeli securities rose slightly to 13.8% at the end of March 1998, up from 13.7% in February, and equal to 13.8% in January, the Bank of Israel reported. The central bank reported that foreign investors with investments of over 5% in a publicly traded company, thus making them substantial owners, rose to 8.8% in March, compared to 7.9% in February and 7.8% in January. Foreign holdings in traded bonds remained at 0.5% in March the same as in February, and foreign holdings of private traded bonds remained stable at 0.3% the same as in February and January. (www.bankisrael.gov.il)
Bank of Israel - Gabi Fishman, 02-6552712

* FOREIGN CURRENCY RESERVES FALL TO $21.53 BILLION IN MAY Israel's foreign currency reserves fell by $306 million to $21.53 billion at the end of May, the Bank of Israel reported. The central bank announced that the decrease was primarily due to government payments, mostly of due debts, abroad during the month. (www.bankisrael.gov.il)
Bank of Israel - Gabi Fishman, 02-6552712

* MONEY SUPPLY INCREASES BY 4.7% IN APRIL Israel's money supply (M1) rose by 4.7% during the month of April, the Bank of Israel announced. Since the beginning of 1998, the M1 has risen by 5.4% and has risen by 13.3% over the last 12 months, according to the bank. (www.bankisrael.gov.il)
Bank of Israel - Gabi Fishman, 02-6552712

* COMMERCIAL AND SERVICES SECTORS GROW BY 1.5% DURING FIRST QUARTER OF 1998 Israel's commercial and services sectors grew at an annual rate of 1.5% during the first quarter of 1998, the Central Bureau of Statistics reported. In the food and hospitality services sector, an annual growth rate of 1.5% was recorded, with the retail sector also showing an annual growth rate of 1.5% and the wholesale sector having a 4.5% annual growth rate during the quarter. The financial, business and real estate services sector fell at an annual rate of 1% during the quarter, while the personal services sector also fell at an annual rate of 0.5% during this time period. (www.cbs.gov.il)
Central Bureau of Statistics - David Neumann, 02-6533400

* INDUSTRIAL PRODUCTION UP BY 7-8% DURING FIRST QUARTER OF 1998 Israel's Industrial production rose at an annual rate of between 7-8% during the first three months of 1998, the Central Bureau of Statistics reported. During the same period, the cutbacks in industrial investment in machinery and equipment that have been continuing since September 1997, stabilized with an increase of 2% in the import of investment inputs during April. Chain store sales during the period rose by an annual rate 12- 13% higher than that of 1997. (www.cbs.gov.il)
Central Bureau of Statistics - David Neumann, 02-6533400

FOREIGN TRADE:

* TRADE WITH STATE OF CALIFORNIA WAS $1.5 BILLION IN 1997 Israel's trade with California was $1.5 billion in 1997, the Industry and Trade Ministry reported on the eve of Minister Sharansky's visit to the TechVenture Trade Show at which 120 Israeli companies are exhibiting. During his visit, Sharansky is expected to sign an R&D cooperation agreement with California as well as meet with executives of California-based concerns including Intel, 3Com, and Cisco Systems. Exports to the U.S. state were approximately $800 million in 1997.