ECONOMIC SURVEY - 27-May-98

27 May 1998

(Communicated by GPO Economics Desk)

GOVERNMENT SECTOR:

* PRIME MINISTER ADDRESSES INTERNATIONAL ANALYSTS
Israel is a country whose economy is based upon conceptual capital and has the greatest concentration of value added conceptual workers in the world, Prime Minister Benjamin Netanyahu told a group of international country analysts in Tel Aviv on 19.5.98. The analysts were attending a Euromoney conference on Israel: Economic Prospects for the new millennium. Due to the arrival of highly educated and trained immigrants over the past decade, mostly from the former Soviet Union, high-caliber research and development institutions, and "the military's perpetual motion machine that innovates and produces knowledge thinkers and workers," Israel is poised to realize its tremendous growth potential, the Prime Minister said. He noted that to be competitive in the global world, a country or company can no longer rely only on economies of scale, but rather on economies of innovation and conceptual capital. Israel has more start-ups, 3,000 in number, than any other country outside of the United States; the high tech sector's exports have risen by 20% annually and already account for close to 80% of industrial exports, he said.
(www.pmo.gov.il)
Prime Minister's Office - Shai Bazak, 02-6705465

* ISRAEL-PALESTINIAN JOINT ECONOMIC COMMITTEE CONVENES
The Joint Economic Committee (JEC) between Israel and the Palestinian Authority is holding its first ever meeting in Ramallah, today. Previous venues for the meetings included Tel Aviv and Jerusalem. Discussions in the JEC will include cooperation in year 2000 tourism, trade issues between the PA and Israel, and how to counter the severe auto theft phenomenon. "Promoting economic ties between Israel and the Palestinian Authority is in the interest of both parties," says Finance Ministry Director General Ben-Zion Zilberfarb. "A healthy economy, economic growth and good neighborly relations will deepen trade ties and cooperation between Israel and the Palestinian Authority."
(www.mof.gov.il)
Finance Ministry - Eli Yosef, 02-5317201

* BANK OF ISRAEL REDUCES INTEREST RATE BY 0.3% FOR JUNE
The Bank of Israel announced that it was reducing the interest on the funds its lends to commercial banks by 0.3%, beginning in June. Since the beginning of 1998, the interest rate has been reduced by 1.8%; since July 1996, it has dropped by 5.4%. The central bank reported that this move was being taken because inflationary expectations, as well as actual inflation, have fallen during the past year. In addition, experience from around the world shows that the central bank's monetary policy needs to be kept steady in period such as the one Israel is now going through.
(www.bankisrael.gov.il)
Bank of Israel - Gabi Fishman, 02-6552712

MACRO-ECONOMIC SECTOR:

* NON-FINANCIAL PRIVATE SECTOR CREDIT FROM ABROAD ROSE TO $5.8 BILLION IN 1998
Israel's non-financial private sector took credit from abroad worth $5.8 billion in February 1998, up from $5.6 billion in 1997, and $4.68 billion in 1996, the Bank of Israel reported. Approximately 60% of the loans were from foreign banks with about 25% from bond issues, and the rest from other sources during both 1997 and 1996. A large majority of the funds was used to import fixed assets such as machinery and manufacturing equipment. In addition, some 75% of the funds were used by only 10 concerns, according to the central bank.
(www.bankisrael.gov.il)
Bank of Israel - Gabi Fishman, 02-6552712

* TOURIST OVERNIGHTS DOWN 3.5% DURING FIRST FOUR MONTHS OF 1998
The number of tourist overnights in hotels fell 3.5% to 4.6 million, during the first four months of 1998, as compared to the same period in 1997, the Central Bureau of Statistics reported. Of the 4.6 million nights, 2.5 million were by tourists, a fall of 18% when compared to the same four months in 1997; 2.1 million nights were by Israelis, an increase of 21% during the same period last year. Occupancy rates were approximately 53%, down 11% from 1997 and 22% less than in 1996. Part of this fall was also due to an increase of 5% in the number of hotel rooms opened during the period.
(www.cbs.gov.il)
Central Bureau of Statistics - David Neumann, 02-6553400

DEFENSE INDUSTRIES SECTOR:

* ISRAEL AIRCRAFT INDUSTRIES REACHES AGREEMENT TO PRODUCE SMALL SATELLITE LAUNCHERS WITH U.S. COMPANY
Israel Aircraft Industries and Florida-based Coleman Research Corporation have reached an agreement to use IAI's Shavit rocket launcher technology as the basis for small expendable launch vehicles to be used in the U.S. market. The Shavit technology has launched three Ofeq satellites into orbit and the new IAI/CRC vehicle will be able to launch up to 1,000 pounds of payload.
Israel Aircraft Industries - Doron Suslik, 03-9358509

DELEGATIONS: