While Israeli Prime Minister Ehud Barak struggled to overcome his worst political crisis and revive peace talks with the Palestinians, he received some good news on the economic front on Thursday.
The latest report by the central bank painted a positive picture of the country's economic fortunes and private economists have forecast higher growth rates and falling unemployment.
"Economic growth is occurring while structural changes are taking place which should ensure that growth will be sustained," the Bank of Israel said in its half-yearly review. It highlighted the expanding high-tech industry, a rapid increase in exports and growing public and private consumption and a decline in the budget deficit, while inflation was also under control.
Economists have revised upwards their estimates of gross domestic product growth (GDP) this year to between 5.5 percent and six percent, the Yediot Aharonot daily reported. An initial forecast of three percent was already upped to 4.5 percent last month by the central bank and the finance ministry.
The bank also said unemployment fell to 8.6 percent in the first quarter of this year from 8.9 percent in the preceding three months, and economists say it should drop further this year. The consumer price index rose by 0.8 percent in annual terms in the first half of the year and the bank said inflation should settle close to the lower limit of a three to four percent target for 2000 and 20001. The bank also said the budget deficit for this year was likely to come in "significantly below" its forecast 2.5 percent thanks to higher than expected income tax revenue.
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)
