Morgan Stanley raised its forecast for Israel's economic growth in 2010 to 3.7%, up from its previous call of 2.7%. The new figure is higher than the Bank of Israel recently raised estimate of 3.5%.
For 2011, Morgan Stanley estimates 3.2% GDP growth, up from its previous estimate of 3.1%.
The investment bank also feels that Governor of the Bank of Israel Prof. Stanley Fischer will not be able to continue long term to intervene in the foreign currency market, saying it has a high price and is a losing battle. At the same time, the bank does say that if Fischer continues for another term as head of the Bank of Israel, it will be a positive development for Israel's economy.
Despite the Consumer Price Index (CPI) surprising and remaining unchanged in December foreign investment banks still expect that the Bank of Israel will have to raise the interest rate in the future. Goldman Sachs expects that Governor of the Bank of Israel Prof. Stanley Fischer will hold interest rates steady this month, but raise it next month by 0.25% to 1.5%. The investment bank believes that the interest rate will reach 3% by the end of 2010.
Published by Globes [online], Israel business news - www.globes-online.com - on January 18, 2010
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