ECONOMIC SURVEY
August 11, 1998
(Communicated by GPO Economics Desk)
MACRO-ECONOMIC SECTOR:
* MAIN ECONOMIC INDICATORS FOR MAY-JUNE 1998 IMPLY NO TURNING-POINT IN
ECONOMIC ACTIVITY
Monthly indicators, recently summarized by the Central Bureau of
Statistics, do not indicate a turning-point in economic activity in
Israel. Industrial production grew by 3% over the past five months
(compared to 2% growth during 1997). Investment in machinery and equipment
by factories since March 1998 shows an average monthly increase of over
12.5%, as opposed to an average decrease between September 1997 and
February 1998. Unemployment rose to 9.3% in May. Marketing networks' sales
growth slowed to 3% in June, compared to 4% in April-May. Tourist arrivals
rose significantly in May-June, reaching an annual growth rate of 17%-18%.
Export growth (excluding diamonds and exports to Judea, Samaria and Gaza)
continued to decline and reached 3% in June. Growth in the trade deficit
slowed in both May and June. The consumer price index increased to an
annual rate of 5%-6% in the same period.
(www.cbs.gov.il)
Central Bureau of Statistics - David Neumann, 972-2-6553400
* FOREIGN CURRENCY RESERVES UP TO $21.38 BILLION IN JULY
Israel's foreign currency reserves rose by $56 million to reach $21.38
billion at the end of July 1998, the Bank of Israel reported. The rise was
primarily due to revenues received by the Bank, partially offset by
Government activity in foreign currency, the Bank said.
(www.bankisrael.gov.il)
Bank of Israel - Gabi Fishman, 972-2-6552712
GOVERNMENT SECTOR:
* ECONOMIC-SOCIAL COUNCIL MEETS FOR THE FIRST TIME
The recently established Economic and Social Council, chaired by Prime
Minister Benjamin Netanyahu, met for the first time last Friday (7 August)
at the Prime Minister's Office. It was decided to establish two working
groups, both headed by Finance Minister Ya'acov Ne'eman. The teams will
formulate solutions for unemployment and discuss infrastructure projects,
respectively. A subcommittee headed by PM's Office Director-General Moshe
Leon will discuss the issue of incentives to factories who are willing to
absorb new employees, and will file its recommendations within two weeks.
The Council will meet monthly. (www.pmo.gov.il)
(Communicated by Prime Minister's Media Advisor)
* MINISTRY OF FINANCE: PROPOSAL FOR ECONOMIC POLICY INDICATES CHANGE OF
ECONOMIC AGENDA
Finance Ministry Director-General Ben-Zion Zilberfarb addressed the
Cabinet at its 10.8.98 meeting and said that measures being currently
taken by both the Ministry of Finance and the Bank of Israel, with the
approval of Prime Minister Benjamin Netanyahu, are the first steps towards
boosting growth and reducing unemployment, thus effecting a change in
Israel's economic priorities. He added that if the Finance Ministry's
proposals are approved and implemented by the government, emphasis will be
shifted from fighting inflation and the balance of payments deficit to
halting the growth of unemployment, creating new jobs, and rekindling
economic growth. After three years of a slow growth, the Ministry's
forecast indicates a turning-point and an increase of at least 1% in the
growth rate in 1999, as compared to 1998. Measures taken by the Ministry
of Finance and the Bank of Israel at the end of last week included:
setting 1999's inflation target at 4%, reducing interest rates by 1.5% to
9.5% and making a technical change in the shekel's exchange rate
mechanism. (www.mof.gov.il)
Finance Ministry - Eli Yosef, 972-2-5317201
PRIVATE SECTOR:
* PHILLIPS ELECTRONICS OPENS OFFICE IN ISRAEL
Amsterdam-based Phillips has decided to open an office of Phillips
Electronics in Israel. The concern's annual turnover is $38 billion. It
has 260,000 employees around the world and has an annual research and
development investment budget of $2 billion.
Israel Manufacturers Association - Danny Laish, 972-3-5198875