Bank Leumi has cut its 2010 GDP growth estimate for Israel, and expects lower 2011 growth than the Bank of Israel.
Israel's GDP grew by an annualized 3.3% in the first quarter, less than the annualized growth rate of 4.8% in the fourth quarter of 2009. The slower growth was due to a sharp drop in export caused by the strong shekel and a drop in world trade.
"There will be relatively slow growth in the Western world in the next year or two, due to very slow growth in Europe," says Bank Leumi, hinting at the debt crisis in Europe. The bank adds, "There will be slower growth in the US compared with the last two quarters (annualized 5.5% in the fourth quarter of 2009 and 3.2% in the first quarter of 2010), but the slowdown is expected to be less than in Europe."
Bank Leumi predicts 3.8% GDP growth for Israel in 2010 and 3% growth in 2011. The Bank of Israel predicts 3.7% GDP growth for Israel in 2010 and 4% growth in 2011.
"Israel's monetary policy will continue to be expansionist in the near term, and real interest rates will probably reach 0% at the most toward the end of the year," says Bank Leumi.
Published by Globes [online], Israel business news - www.globes-online.com - on May 20, 2010
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