ECONOMIC SURVEY - 24-Jun-98

June 24, 1998

(Communicated by GPO Economics Desk)

GOVERNMENT SECTOR:

* BANK OF ISRAEL REDUCES INTEREST RATE BY 0.3% FOR JULY
The Bank of Israel announced that it was reducing the interest by 0.3% on the funds its lends to commercial banks beginning in July. This is the fourth month in a row that the bank has dropped its main lending rate by 0.3%. Since the beginning of 1998, the interest rate has been reduced by 2.1%; since mid-1996, it has dropped by 5.7%. The central bank reported that this move was being taken because inflationary expectations, as well as actual inflation, have fallen during the past year, and because other economic pressures such as local economic activity and prices internationally are keeping inflationary expectations low. The central bank also noted that a responsible monetary policy is required in the light of economic events in Southeast Asia and in order to realize the country's economic potential.
(www.bankisrael.gov.il)
Bank of Israel - Gabi Fishman, 02-6552712

* ISRAEL AND U.S. AGREE TO OPEN FEDERAL TELECOM TENDERS TO ISRAELI COMPANIES
Israel and the United States agreed to cancel an American regulation that prohibited Israeli firms from participating in federal government telecommunications tenders, the Industry and Trade Ministry reported. Industry and Trade Minister Natan Sharansky announced that the agreement, completed only last week, is the result of extended negotiations to drop customs user fees on the importation of Israeli telecom equipment that prevented Israeli firms from competing in these tenders. Israeli firms will now be considered equal to their counterparts from Canada, Mexico and the Caribbean.
(www.tamas.gov.il)
Industry and Trade Ministry - Haya Peri, 02-6220340

MACRO-ECONOMIC SECTOR:

* FOREIGN INVESTMENT DECLINES 45% BETWEEN JANUARY-MAY 1998
Foreign investment into Israel dropped by 45% to $806 million during the first five months of 1998, as compared to $1.46 billion during the first five months of 1997, the Bank of Israel reported. Non-financial investments fell to $214 million as compared to $698 million, while financial investments fell to $592 million as compared to $764 million, during the relative periods. (www.bankisrael.gov.il)
Bank of Israel - Gabi Fishman, 02-6552712

* FOREIGN HOLDINGS ON TASE REMAIN STABLE IN APRIL 1998
Holdings of foreign investors on the Tel Aviv Stock Exchange remained stable during the month of April 1998, the Bank of Israel reported. Foreign holdings of traded securities remained at 13.7%, of negotiable private bonds at 0.3%, and of negotiable government bonds at 0.5%.

(www.bankisrael.gov.il)
Bank of Israel - Gabi Fishman, 02-6552712

* COMMERCE AND SERVICES REVENUES UP BY 5%
Revenues from Israel's commerce and services rose by an annual average rate of 5% during the first four months of 1998, equal to that of 1997, the Central Bureau of Statistics announced. Financial service, business service, and real estate service sectors showed an annual rate of increase of 8%, while health, education and personal services grew at an annual rate of 3.5%.
(www.cbs.gov.il)
Central Bureau of Statistics - David Neumann, 02-6553400

DEFENSE INDUSTRIES SECTOR:

* ELBIT AWARDED $21.6 MILLION CONTRACT FOR NAVAL SYSTEMS
Elbit Systems was awarded a contract worth $21.6 million from Ingalls Shipbuilding of the United States for the supply of naval command and control systems and for their integration into a group of frigates from the Venezuelan Navy. Elbit Systems will be responsible for integrating the systems into the ships as part of an upgrade program. The company expects the work to take 20 months.
(www.elbit.co.il)
Elbit Systems - Arie Tal, 04-8326632

DELEGATIONS: