The Economist upgrades Israel forecast

The British economic weekly predicts that growth in Israel will be much higher in 2004.

Prestigious British weekly The Economist today published an optimistic updated forecast for the Israeli economy.

The Economist predicted that growth in Israel would be much higher in 2004, led by exports. The magazine stressed that recovery in economic activity and tax revenues had begun as early as mid-2003.

The Economist praised the Bank of Israels interest rate policy, saying that foreign currency exchange rates had remained stable, despite the interest rate cuts.

The magazine believes that inflation and prices will continue to fall in the coming months, as a result of lower private consumption and domestic demand. These two factors are expected to rise next year, albeit modestly.

The Economist now forecasts negative inflation for 2003, and very low inflation of 0.8% in 2004.

The magazine also believes that Minister of Finance Benjamin Netanyahus policy will have an effect on the budget deficit. The Economist forecasts that the budget deficit will amount to 4% of GDP in 2004, and 3% in 2005, in line with the official government targets.

Published by Globes [online] - - on October 30, 2003

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