"Global growth forecasts for the second half of 2009 are very pessimistic. The US is expected to achieve 3% growth, and Europe and Japan are projected to see a contraction of almost 6%," Governor of the Bank of Israel Prof. Stanley Fischer today told the Knesset Economic Affairs Committee.
Fischer continued, "Global trade is projected to fall by 9%. If these forecasts turn into facts, it will mean the worst global economic situation since World War II. The pessimistic outlook for global trade is the most important factor because export a substantial part of our production. Obviously, if global trade plummets, we cannot but be affected."
On an optimistic note, Fischer said, "In the past two weeks, people in the US are starting to see signs of spring. We're already seeing them here. The mood there has changed very fast. It's very important that this is happening, and it's mainly based on the changes in the financial market."
Look forward, Fischer said, "We won't see growth until the beginning of next year. It may happen in the fourth quarter of 2009, but we do not expect a recovery until the second half of the year, a real recovery of course. Growth will continue through the end of 2010, reaching a quarterly rate of 4%, which is our potential.
"Unemployment will probably continue to rise through mid-2010. In other words, we face a difficult year. We must pay attention to the real economy precisely when great optimism leaves the financial markets."
Published by Globes [online], Israel business news - www.globes-online.com - on May 6, 2009
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