IMF sees 3.3% Israel growth in 2018

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The International Monetary Fund also predicts that growth in the Israeli economy will rise to 3.5% in 2019 but decline in 2020.

According to a revised global economic forecast by the International Monetary Fund (IMF) published today in Washington DC, Israel's economy will grow 3.3% in 2018 and 3.5% in 2019. The IMF predicts inflation will rise from 0.2% in 2017 to 0.7% in 2018 and 1.3% in 2019.

The IMF believes that unemployment will remain stable at 4.2% over the next two years, while the balance of payments will continue to be positive, with surpluses of 2.6% of GDP in 2018 and 2.7% in 2019.

The IMF's optimistic forecast for the Israeli economy fits in with its global forecast, which predicts that the global economy will grow by a fairly rapid 3.9% both this year and next year.

According to the IMF, expansion of investment in many economies accelerated growth to over 4% in the second half of 2017, the highest figure since 2010. Following the next two years, however, the weight of negative processes and factors will rise and be reflected in lower growth. The IMF expects the current expansionary monetary policy to be abandoned in most economies, while the force of fiscal expansion will dissipate. At the same time, the clear slowing of the increase in productivity and the aging population will have a negative impact on the growth rate.

In its review, the IMF states that governments should take advantage of the relatively comfortable next two years to implement necessary reforms in their economies and prepare them for the lean years likely to appear two years from now. The IMF recommends that governments address the labor market and make sure that larger parts of the population benefit from growth. At the same time, the IMF advises action to ensure financial and fiscal stability in order to increase governments' freedom of action when growth slows down.

In its global forecast, the IMF says that the developed economies will grow faster than their long-term growth potential, thereby narrowing the gap between output and production capacity, especially in Europe. Employment will also be higher than what is regarded as full employment in the US. In Asia and the emerging European markets, growth should be strong, while countries that export commodities and raw materials will benefit from higher demand and exports over the next two years.

Published by Globes [online], Israel business news - - on April 17, 2018

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