Bank of Israel revises growth forecast upwards

The Bank of Israel expects GDP growth in the Israeli economy to reach 3.1% in 2012 and 3.5% in 2013.

The Bank of Israel has revised its GDP growth forecast for 2012 upwards to 3.1% from its previous forecast of 2.8%. The Bank of Israel research department also said that it expects growth to climb to 3.5% in 2013. The central bank added that it predicts inflation of 2.6% over the next 12 months and expects that the interest rate will be 2.5% (its current level) in the first quarter of 2013.

Regarding the growth forecast, the Bank of Israel said, "The forecast for 2012 was revised slightly upward from the December forecast of 2.8%, primarily due to positive indicators of Israel's economy which have been published recently (goods imports, expectations in the survey of business trends, and services exports)."

The Bank of Israel also expects unemployment to rise from its current level of 5.4% to 5.9% by the end of the year.

The Bank of Israel expects inflation to rise due to the rise in the price of oil on global markets, and the recent appreciation of the shekel.

The Bank of Israel lowered its 2012 GDP growth forecast from 3.2% to 2.8% at the end of 2011 due to the eurozone debt crisis. Despite the more upbeat mood, Governor of the Bank of Israel Governor Prof. Stanley Fischer was in cautious mood when he told "Bloomberg" several weeks ago, “It’s important that we keep asking what can go wrong next, because something will go wrong somewhere, sometime and it’s important to try to anticipate where and what it might be."

Published by Globes, Israel business news - www.globes-online.com - on March 26, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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