Macroeconomic conditions have deteriorated in Israel over the course of 2002 with external demand stagnant and the security situation worsening.
According to the International Monetary Fund (IMF), gross domestic product (GDP) growth this year is expected to be at around negative one percent, a negative growth in two successive years.
According to the IMF’s recent Article IV preliminary consultation mission concluding statement for Israel, a temporary loss of confidence in macroeconomic policies that followed the December 2001 policy package caused a major disruption in financial and foreign exchange markets in the first half of 2002.
The two-percentage point interest cut and the subsequent failure to reduce the fiscal deficit as planned, resulted in a sharp depreciation of the shekel, a surge in inflation, and a threat to financial stability. The market disruption necessitated a substantial tightening of monetary policy in the end.
IMF mission concluding statements describe the preliminary findings at the conclusion of certain official staff visits to member countries. Missions are undertaken as part of regular consultations under Article IV of the IMF's Articles of Agreement, in the context of a request to use IMF resources, as part of discussions of staff monitored programs, and as part of other staff reviews of economic developments. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
