No real estate bubble in Israel, Fischer tells foreign investors

The Governor of the Bank of Israel told an investor conference in London that Israel's banking system was well regulated.

Governor of the Bank of Israel Stanley Fischer said again today that, for the time being, the Bank of Israel had no intention of changing its growth forecast for the Israeli economy for the next two years, despite the debt crisis in Europe. Fischer made the comments at the annual Tel Aviv Stock Exchange London Investor Conference.

The Bank of Israel's growth forecasts are 3.7% for 2010 and 4% for 2011. Fischer also mentioned the relatively low unemployment rate in Israel (7.2%, versus 9.7% in the US and 10% in the eurozone) and said that the flexibility shown by Israelis during the crisis contributed to the stability of the labor market. Fischer was referring to the fact that workers in Israel were prepared to take wage cuts, which prevented wider layoffs and moderated the rise in unemployment.

Fischer said that the economy had proved resilient in crises and that it was robust. He also noted positively the conservative banking system and the regulation that had proved itself during the crisis.

He said the banking system was well controlled, especially in the area of mortgages, and noted the absence of a price bubble in the Israeli real estate market.

The Governor also remarked on the relatively high saving rate among Israelis, the current account surplus, and Israel's high foreign currency reserves.

He noted that the sharp appreciation of Israel's shekel had largely been driven by the weakness of the euro, but added that intervention earlier this year to cap the local currency has helped. "We've had massive appreciation against the euro.The shekel on average has appreciated relative to a few months ago but it's much better than it would have been had we not intervened," Fischer said.

Published by Globes [online], Israel business news - - on July 1, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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