Hit by a US economic slump and the nine-month Palestinian uprising, Israel's economy may not reach even one percent growth this year, Finance Minister Sylvan Shalom was quoted as saying by the Jerusalem Post newspaper on Thursday, July 5.
Even with the government expecting tax revenues to rise by 2.5 percent in the second half of 2001 compared to the same period last year, Shalom said: "There is no doubt that we are in an economic crisis, such as we have not been in for decades."
"Just this evening, while discussing next year's budget with Treasury officials, I was given up-to-date growth forecasts showing that the economy will grow by one percent this year," Shalom said in a speech to the Jerusalem Economic Club. "It may even be less than one percent.
"I have been in office three months and the economic projections keep getting worse," Shalom added.
Treasury officials had first predicted 4.5 percent growth for Gross Domestic Product (GDP) in 2001, based on six percent growth in 2000. But rosy prospects have been crushed by the struggling hi-tech market, which carried Israel's economy last year, and a huge drop-off in tourism revenue.
Since fighting broke out last September, tourism revenues had dropped by 35 percent. "We all know that when there are economic problems abroad, Israeli exports suffer," Shalom said. "The hi-tech industry has been hit hard, reversing massive growth felt in this sector during the last few years."
Last year, capital venture firms invested $3.2 billion in Israeli start-up companies. In 2001, the number is expected to drop by half, according to Israel's Industrial Association, the country's leading employers organization. But Shalom said he expected a return to high growth in 2002. ― (AFP, Jerusalem)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)
