"The Israeli economy began to recover from the economic crisis sooner than expected," says the Bank of Israel in its Survey of Economic Developments - May-August 2009. In defending its dollar purchasing program, the central banks declares, "The daily purchases of foreign currency during most of the period reviewed moderated the appreciation of the shekel."
The Bank of Israel's dollar purchasing policy to support the shekel-dollar exchange rate has boosted its foreign currency reserves to an all-time high of $60 billion. The shekel appreciated 4.8% against the dollar in May-August, which the Bank of Israel attributes to "exchange rate trends in international markets, including the weakening of the dollar, the surplus in Israel current accounts, and optimistic assessments about the recovery of the Israeli economy from the crisis more quickly than other economies."
The Bank of Israel attributes Israel's economic recovery to a modest rise in private consumption, which accounts for more than 40% of GDP, the growth in international trade, and rallies in stock markets.
The Bank of Israel cautions, however, that a double-dip global recession is still possible, while there is talk in the US of a third stimulus package with a focus on job creation. "Israel's economic growth is dependent on the global recovery continuing," it warns.
Published by Globes [online], Israel business news - www.globes-online.com - on October 11, 2009
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