ECONOMIC SURVEY - 29-Jan-98

January 29, 1998

(COMMUNICATED BY GPO ECONOMICS DESK)

MACRO-ECONOMIC SECTOR:

* SECOND HALF OF 1997 SHOWS LOWER INFLATION, DROP IN BALANCE OF TRADE DEFICIT, INCREASE IN UNEMPLOYMENT AND CONTINUED SLOW GROWTH IN GDP
During the second half of 1997, Israel's GDP continued to grow slowly at an annual rate of 2% (the same as during the first half of the year), the inflation rate fell at end the year to 7%, unemployment rose to 8.1% and the balance of trade deficit fell by approximately $200 million per month, according to the Bank of Israel. The lower growth rate was a result of depressed local demand, and shows the influence of cyclical factors and restrained monetary and fiscal policies. In addition, investments and consumption influences from the massive wave of immigrants from the early 1990s decreased due to fewer new immigrants, the ongoing structural changes in the makeup of the economy especially in traditional industries and uncertainty in the peace process led to a slowdown in aspects of economic activity.
Bank of Israel - Gabi Fishman, 972-2-6552712

* EXPORTS TO ASIA FALL BY 1% IN 1997
Israel's exports to Asia fell by 1% to $3.64 billion in 1997, compared to the previous year. During the fourth quarter of 1997, exports to the region fell by 20% and diamond and precious stone exports there fell by 48%, according to the Industry and Trade Ministry. Despite the crisis, the ministry reports, chemical, optics and plastics exports to the region rose. Compared to 1996, exports to Thailand fell by 32%, Japan by 14.7%, China by 14% and to the Philippines by 3.6%. Exports in 1997 to Taiwan rose by 51%, Singapore by 31%, South Korea by 13%, India by 11.6% and to Hong Kong by 5.2%.
Industry and Trade Ministry - Haya Peri, 972-2-6220340

* HOTELS REPORT DECREASE IN FOREIGN TOURIST OVERNIGHTS
Though overnight stays in Israeli hotels remained stable in 1997, at about 16.1 million overnights, tourist overnights fell by 9% whereas Israeli overnights rose by 10%, the Central Bureau of Statistics reported. The average occupancy rate for the 38,400 hotel rooms was 60.5% in 1997, compared to 66% in 1996, and 68% in 1995. The Israeli occupancy rate was 50% in 1997, up from 45% in 1996 and 41% in 1995. Occupancy rates also varied by city, with a 4% drop being reported in Tel Aviv, a 7-10% drop in Jerusalem, Tiberias, Netanya and Kibbutz guest hotels, as opposed to an increase of 10% in Eilat and an increase of over 20% in the Dead Sea area.
Central Bureau of Statistics - David Neumann, 972-2-6553400

* M1 CURRENCY RATE UP BY 4.6% IN DECEMBER 1997
Israel's money supply rate (M1) rose by 4.6% in December 1997, compared to a decrease of 4.6% the month earlier, the Bank of Israel reported. For the year, the M1 index rose by 14.6%, compared to an increase of 11.9% in 1996 and 16.5% in 1995, the central bank wrote.
Bank of Israel - Gabi Fishman, 972-2-6552712

* CHEMICAL EXPORTS RISE BY 14% TO $2.5 BILLION IN 1997
Israel's chemical industry exports rose by 14% to $2.5 billion in 1997, according to the Israel Manufacturers Association. During the past three years, firms in this, and in the pharmaceutical sector have purchased $650 million worth of assets abroad. In 1997, the chemical sector grew by 10%, whereas Israel's GDP grew just over 2%. According to the manufacturers association, the sector's exports are set to increase by 7% and reach $2.7 billion out of total sales which are expected to reach $6 billion (excluding fuels) in the coming year. During 1997, investments within the sector reached $810 million, a 5% decrease from the same figure in 1996.
Israel Manufacturers Association - Danny Laish, 972-3-5198755

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