“The Economist” estimates that Israel’s economy is growing by an annualized 5.7%, well above the Central Bureau of Statistics’ estimate of 5.1%. It is nevertheless still uncertain how much Israel’s economy will grow in 2005, in view of the slower growth rate during the third quarter. The Ministry of Finance mentions 4.7% growth, while the Bank of Israel mentions a faster rate.
“The Economist” says that industrial output rose by 12.1% in the past 12 months, well above forecasts. Israel has an unexpected $1.3 billion balance of payments surplus, and its foreign currency reserves total $28.4 billion, ensuring foreign currency calm. Israel $8.3 billion trade deficit indicates high growth potential in the coming months.
However, inflation is again rearing its head in Israel, and the shekel is depreciating rapidly against the dollar. Inflation in the past 12 months was 2.7%, more than double the rate in 2004. Inflation in 2005 is liable to reach 3.1%, above the government’s 1-3% inflation target.
The shekel-dollar exchange rate stabilized last week at an average of NIS 4.71/$, NIS 0.34 higher than a year ago. The short-term interest rate is 4.56% a year, above the Bank of Israel interest rate.
“The Economist” notes the high volume of trading on the TASE: NIS 774.4 million. The TASE rose 2.8% last week, and is up 20.3% since the beginning of the year. In dollar terms, the TASE has risen 10.2%.
The TASE’s performance lags far behind the stock exchanges in other emerging markets. The Egyptian Stock Exchange has risen 108.6% in dollar terms since the beginning of the year, and Colombia Stock Exchange has risen 100.7%.
Published by Globes [online], Israel business news - www.globes.co.il - on November 28, 2005