Four analysts see slower Israeli growth but no recession
HSBC Israel macroeconomist Yohanan Katz says, "The Israeli economy's growth engines are well known, and if we continue to see sharp falls in the markets resulting in a loss of consumer and business sector confidence, this will definitely affect us. If the world reverts to economic contraction, that will unquestionably affect Israel."
"A repeat of the 2009 scenario is extreme, and I don’t think that we'll ever be in such a hole again. However, there is no doubt that the Israeli economy could slow sharply and we can expect another downward update of growth forecasts by the Bank of Israel. I believe that 2% growth in the second half of 2011 is possible and realistic."
Harel Insurance Investments and Financial Services Ltd. chief economist Dr. Michael Sarel says, "Israel is in relatively good shape. Obviously, a US and European recession will hurt Israeli exports, but domestic demand, especially in investment, including residential real estate, and private consumption currently looks strong, and will probably continue to grow. Although possible, I don’t expect a recession in the near term.
"We expect a small downward revision to the growth forecast, but it will be nowhere near the rate of a recession. Not including all the events of the past month, our forecast predicts a substantial slowdown in Israel's growth rate."
Psagot Investment House Ltd. macroeconomist Ori Greenfeld says, "Based on what we see in the published macroeconomic figures, Israel is already in a slowdown, mainly due to the slowing of exports. Bottom line, as a small export-oriented economy that mainly targets the US and Europe, we will obviously be hurt and we'll see slower growth in the coming quarters. However, we do not expect to revert to the growth rates of 2009, but growth of 4%. The risk is that the debt crisis in Europe is liable to turn into a global financial crisis, which greatly increases the risk of a worst-case scenario.
"The recent events in Israeli society will likely affect the Bank of Israel's monetary policy, resulting in continuing low interest rates, which will support the non-financial sector, especially investment."
Prof. Rafi Melnik of the Interdisciplinary Center Herzliya says, "The Israeli economy is strongly affected by global developments. We're a very small and open economy, so the business cycle of the past few years, especially the last crisis in 2009, was entirely foreign made. I don’t currently see economic reasons within Israel that could cause a recession, or even a slowdown in economic activity, but if the recent events cause the global economy to slow down, we'll unquestionably be affected.
"While the chances of a slowdown are small, but the global financial situation is unsustainable - the US debts and deficits cannot continue for long. This anxiety is liable to affect the non-financial sector."
Published by Globes [online], Israel business news - www.globes-online.com - on August 10, 2011
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