ECONOMIC SURVEY
15 March 1998
(Communicated by GPO Economics Desk)
MACRO-ECONOMIC NEWS:
* IMF REPORTS ON STATE OF ISRAEL'S ECONOMY
The International Monetary Fund Executive Board released its 1997 annual
review of Israel's economy last week, stating: "While growth had slowed
and unemployment has risen in 1997, there were a number of encouraging
features in economic development that augured well for future economic
performance. Of particular importance was the authorities' success in
attaining their targets for the fiscal deficit and inflation, as well as
the substantial progress in structural reforms. Nevertheless, with
unemployment rising, the economic situation remains difficult, and
Directors (IMF) called for vigorous efforts to set conditions that would
permit sustained growth in line with Israel's potential, together with a
further substantial drop in inflation and a viable external position. They
advocated steady pursuit of a strategy of strong and sustained fiscal
consolidation and bold structural reform that would reduce the burden on
monetary policy. Directors also stressed the critical role of the peace
process for economic prosperity in Israel and the region."
Bank of Israel (www.bankisrael.gov.il)
- Gabi Fishman, 972-2-6552712
* BANK OF ISRAEL PUBLISHES FIRST EVER ANNUAL INFLATION REPORT
The Bank of Israel has published its first ever "inflation report,"
covering 1997 with forecasts for the future, the central bank reported.
The report deals with monetary and fiscal developments during 1997 and
prior years, and is meant by the bank to provide a framework for
international comparisons with other major OECD central banks which also
publish reports.
Bank of Israel (www.bankisrael.gov.il)
- Gabi Fishman, 972-2-6552712
* DECREASE IN BALANCE OF PAYMENTS DEFICIT IN 1997
Israel's balance of payments deficit fell to $3.6 billion in 1997, after
having risen to $5.3 billion in 1996, the Central Bureau of Statistics
reported. The decrease resulted from an increase in exports of goods and
services, an increase in unilateral transfers to Israel, and stability in
the import of goods and services. In addition, foreign investment in
Israel rose to $3.4 billion in 1997, as compared to $2.4 billion in 1996,
and investments abroad by Israeli residents rose to $800 million last
year, as compared to $700 million in 1996. Israel's net debt abroad rose
by $5.6 billion in 1997, as opposed to an increase of $3.6 billion the
prior year. The banking sector accounted for $2.3 billion in the increase,
the private sector for $2.1 billion, and the public sector for $1.2
billion.
Central Bureau of Statistics (www.cbs.gov.il)
- David Neumann,972-2-6553400
* CONSUMER GOODS IMPORTS PRIMARILY DOWN IN FIRST TWO MONTHS OF 1998
Consumer goods imports into Israel were almost uniformly down during the
first two months of 1998, as compared to the corresponding period in 1997,
the Finance Ministry reported. Automobile imports dropped by 12.5%,
clothes washing machine by 12%, video machines by 4.4%, dish washing
machines by 2%, and refrigerators by 1.3%. Only imports of television sets
showed an increase during the period, as compared to that of 1997, by 2%,
the ministry reported.
Finance Ministry (www.mof.gov.il)
- Eli Yosef, 972-2-5317201
* GROSS EXTERNAL DEBT RISES TO $51.1 BILLION IN 1997
Israel's gross external debt rose by $4.1 billion to reach $51.1 billion
in 1997, the Bank of Israel reported. However, the national external debt
(gross external debt offset by Israeli assets abroad and bonds, loans, and
the Bank of Israel's foreign currency reserves) fell by $1.9 billion
during the year to reach $17.9 billion, the central bank announced. The
public sector's debts abroad increased by $900 million due to increased
government loans from abroad and funds raised by Israel Bonds, while the
non-banking private sector's debts rose by $1.2 billion, due to long-term
credit taken from abroad and securities offerings. The banking sector's
external debts rose by approximately $2 billion from short- and long-term
loans. According to the central bank, in 1997 Israel's long- term debt
stood at approximately 66% of all the gross external debt.
Bank of Israel (www.bankisrael.gov.il)
- Gabi Fishman, 972-2-6552712
GOVERNMENT SECTOR:
* ISRAEL PREPARING FOR INTRODUCTION OF EURO CURRENCY
Finance Minister Ya'acov Ne'eman has instructed all ministry division
heads to begin examining the steps Israel needs to take in order to be
prepared for the entry of the European Monetary Union "Euro" single
currency. Ramifications of the "Euro" will be significant for Israel, the
minister said, particularly because more than 50% of the country's trade
is conducted with Europe. The ministry's international division will serve
as the coordinating body between government ministries and the European
Union, and will disseminate information to the various sectors.
Finance Ministry (www.mof.gov.il)
- Dan Catarivas, 972-2-5317125