The OECD says that Israel will probably avoid recession, but the weakening external demand is nevertheless prompting a slowdown in output growth that is unlikely to reverse until the middle of 2012. The worsening prospects for output and employment, along with lower inflation expectations and outcomes, have led to an easing of the monetary policy stance.
In its Economic Outlook, the OECD predicts that Israel's GDP growth rate will slow from 4.7% in 2011 to 2.9% in 2012, and rebound to 3.9% in 2013. Export growth will slow from 4.8% in 2011 to 3.9% in 2012, and partly recovery to 7.8% in 2013. The unemployment rate will rise from 5.6% in 2011 to 6% in 2012, and fall back to 5.8% in 2013.
The OECD also expects the rise in the Consumer Price Index (CPI) to slow from 3.5% in 2011 to 2% in 2012 and 2.1% in 2013 - the mid-point of the government's 1-3% inflation target. The budget deficit will fall from 4% in 2011 to 3.8% in 2012 and 3.5% in 2013.
Published by Globes [online], Israel business news - www.globes-online.com - on November 28, 2011
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