ECONOMIC SURVEY - 10-Jun-98

June 10, 1998

(COMMUNICATED BY GPO ECONOMICS DESK)

MACRO-ECONOMIC NEWS:

* BANK OF ISRAEL WARNS OF RISKY LOANS BY BANKING SECTOR
Israel's banks are open to risks from problematic loans which they have made to the construction and real estate sectors because of taking resources for these loans in foreign currency and lending them in shekels, according to the Bank of Israel's Banking Sector Supervisor, Ze'ev Abeles. Abeles said that the slowdown in the building sector, combined with foreign currency fluctuations, could pose problems for these concerns to pay back their loans and thus are now more risky for the banks. He noted that the banking sectors' return on equity during the first quarter of 1998 decreased to 9.4% as compared to 10.8% during the same period in 1997. Abeles said that this was partly due to an increase in wage expenditures, including severance pay to departing employees.
(www.bankisrael.gov.il)
Bank of Israel - Gabi Fishman 972-2-6552712

* KILOMETRAGE TRAVELED BY VEHICLES INCREASES BY 6% IN 1997
National kilometrage traveled by motor vehicles in 1997 rose by 6% to approximately 33.6 billion kilometers, the Central Bureau of Statistics reported. The increase was due to an increase of 5% in the number of vehicles on the roads and an increase of 1% in the number of kilometers traveled. The annual average amount of kilometers traveled by a private car in 1997 was 16,900 kilometers.
(www.cbs.gov.il)
Central Bureau of Statistics - David Neumann, 972-2-6553400

* 28% OF TEL AVIV STOCK EXCHANGE SHARES' MARKET VALUE TRADED ON AMERICAN CAPITAL MARKETS
28% of the Tel Aviv Stock Exchange's (TASE) market value were either directly or indirectly also traded on the capital markets in America at the end of March 1998, a study by the TASE revealed. At the end of December 1996, this figure stood at 25%. Dual shares, traded both in Tel Aviv and New York, had a market value of NIS 31 billion, represented approximately one-fifth of TASE's market value. The market value of indirect shares, those belonging to TASE companies with subsidiaries' or substantial holdings in foreign firms whose shares are traded in New York, came to NIS 16 billion.
(www.tase.co.il)
Tel Aviv Stock Exchange - Ofer Simhoni, 972-3-5677405

* INCREASE IN NATIONAL EXPENDITURES ON HEALTH SLOWS DOWN
Israel's national expenditure on health rose by 2% in 1997, down from an increase of 5% in 1996, and an increase of 7% in 1995, the Central Bureau of Statistics reported. National expenditures on health per capita in remained the same in 1997, as compared to 1996, after an increase of 2% in 1996, and of 4% in both 1995 and 1994. The reason for the slowdown in health expenses in 1997 was primarily due the stability in health fund expenditures.
(www.cbs.gov.il)
Central Bureau of Statistics - David Neumann, 972-2-6553400

GOVERNMENT SECTOR:

* ISRAEL AND SOUTH KOREA NEGOTIATING GENERAL TRADE TREATY
Israel and South Korea are in the midst of quickening negotiations over a general trade treaty and an agreement to establish a special research and development fund to encourage joint ventures between the two countries. Industry and Trade Ministry Director-General Dov Mishor met with the new Korean Ambassador where the two discussed these subjects and agreed to take steps to improve trade conditions.
(www.tamas.gov.il)
Industry and Trade Ministry - Haya Peri, 972-2-6220340

PRIVATE SECTOR:

* AMERICA ON LINE ACQUIRES MIRABILIS FOR $287 MILLION
America's largest on-line internet service provider America On-Line (AOL) announced that it has acquired Mirabilis Software for $287 million and an additional $120 million conditional upon the latter's future operations. Mirabilis, which was founded in 1996, created a software program for the internet called ICQ (a play on the words I Seek You) which allows real-time communications between participating internet users.
(www.mirabilis.com)
Mirabilis - Arik Vardi, 972-3-6488090

DELEGATIONS: