Fischer: We can't have strong economy and weak currency

"We have a fairly strong economy compared with Europe, and our interest rate is higher," Bank of Israel Governor Stanley Fischer said in a farewell meeting with the Knesset Economic Affairs Committee.

Governor of the Bank of Israel Prof. Stanley Fischer, who will end his term at the end of the month, today arrived at the Knesset Economic Affairs Committee as he continues his farewell tour of official agencies.

"Stanley is Stanley, and this isn't the Premier League, but the super Premier League," said Economics Committee chairman MK Avishai Braverman (Labor) at the start of the meeting. Turning to Deputy Governor of the Bank of Israel Dr. Karnit Flug, a candidate to succeed Fischer, he said, "She is very skilled and will get the post she deserves."

Today's committee discussion was on promoting a national industrial policy. "We must invest in technologies… The vision of the Start-Up Nation is not suitable, because most jobs are exported and the large salaries do not reach most workers," said Braverman.

"Our main problem with the exchange rate is that we want a strong economy, but a weak currency," said Fischer. "They don’t go together. We have a fairly strong economy compared with Europe, and our interest rate is higher."

"The commercial sector represents about 72% of GDP, and industry represents about 20% of it," Fischer added, "In fact, in no modern economy, even in Germany, is industry the largest sector of the economy. We are seeing a global trend of decline, one that is taking place in Israel too, in industry's share of GDP, and in employees in industry as a proportion of the total workforce. The decline in industry's share of employment is faster than the decline in industry's share of GDP, indicating that productivity growing more rapidly in industry than in the rest of the economy.

"Between 1995 and 2012, the proportion of total exports accounted for by high-tech grew, and high tech and mixed-high tech represent nearly 90% of industrial exports, while the proportion of traditional industry keeps shrinking. Nevertheless, traditional industry employs almost 35% of those employed in industry, even though it represents only 19% of industrial product, and only 5% of industrial exports. This means that if we want to encourage employment in industry, we must also take into account traditional industry, and not just high tech."

Published by Globes [online], Israel business news - www.globes-online.com - on June 10, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

Published by Globes [online], Israel business news - www.globes-online.com - on June 10, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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