"The economic situation is good, but not great," said Governor of the Bank of Israel Prof. Stanley Fischer today at a meeting of the Prime Minister's Office ahead of the publication of GDP figures for the third quarter by the Central Bureau of Statistics this afternoon.
"We've successfully made it through the economic crisis, possibly with the least damage among Western countries, but we didn’t escape unscathed. Unemployment is high at 8%, and growth needs to continue because the pace is not yet enough. It's rare for us to be able to grow without global economic growth."
Fischer added that the recovery by Israeli exports was faster than the recovery in imports, and that this was significant. He also pointed to the impressive recovery by the high-tech industry. He said that Israel had become a country with a built-in surplus in its current accounts, with more foreign currency coming in than going out.
"We have too much foreign currency, which is causing appreciation that doesn’t please everyone. So we're pleased that we have strong current accounts, but we're not so pleased about the repercussion of the strong current accounts. This surplus is affecting the exchange rate and causes problems to people trying to export," he said.
Fischer continued, "Israelis look only at the shekel-dollar exchange rate, and only that. But we export more to Europe than the US, and it's important at the shekel's exchange rate with the basket of currencies of our trading partners. There, we see an appreciation of 12%."
Fischer said that, while it is true that the shekel is strong, it was even more true that the dollar is very weak, and that there was nothing to be done about it because of the huge US current accounts deficit. "There was a need for adjustment, and we see it in the depreciation of the dollar. It won't last forever. People are talking as if it will last forever, but it won't."
Published by Globes [online], Israel business news - www.globes-online.com - on November 16, 2009
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