Deutsche Bank: Stronger economy, stronger shekel

The bank sees strong growth in Israel this year and next.

In a global economic survey, Deutsche Bank forecasts a stronger shekel and strong economic growth in Israel this year and next.

Deutsche Bank sees real GDP growth of 3.7% in 2010, and 4.4% in 2011. The 2011 figure is higher than estimates by the Bank of Israel and the Ministry of Finance. It is also higher than an optimistic outlook reported yesterday by Goldman Sachs, which sees 3.5% real GDP growth this year, and growth of 4.3% in 2011.

Along with the GDP growth, Deutsche Bank economists see the shekel strengthening against the dollar, with the shekel-dollar exchange rate predicted to reach NIS 3.53/$ in 12 months, down from around NIS 3.89/$ currently. They forecast the shekel-euro rate to reach NIS 4.76/€.

Deutsche Bank sees inflation falling from 4% in 2009 to 2.3% in 2010, and to 2.1% in 2011.

The economists also remain positive on global growth, although they note that downside risks have "risen appreciably of late", as concerns grow over Europe's debt crisis and the fragility of the banking system there. Nonetheless, Deutsche Bank says the global economy still appears to be expanding at a "reasonably firm pace", due to growth in emerging markets and continuing recoveries in the US and Japan. They claim the chances of a double dip recession remain relatively low.

Published by Globes [online], Israel business news - - on July 5, 2010

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

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