The OECD has raised Israel's GDP growth forecast in its latest economic outlook due to its successful Covid vaccine rollout and recovery in demand and the job market.
According to the OECD report published today, Israel's GDP growth will be 6.3% in 2021, up from 5% in its last forecast. Israel's Ministry of Finance is more optimistic and predicts growth of over 7% in 2021.
The OECD forecasts growth of 4.9% in Israel in 2022, up from 4.5% in its previous forecast, and sees growth of 4% in 2023.
The OECD wrote, "The progressing booster vaccination campaign, a gradually recovering labor market and fading uncertainty will support domestic demand. Strong growth of high-tech services exports will continue. The recovery could be slower if the health situation deteriorates again, or the increase in inflation is stronger or more persistent than assumed in the projections. Growth could be stronger if accumulated savings are withdrawn more quickly."
The OECD added, "The withdrawal of policy support should be gradual, given still substantial uncertainties about the outlook. Support should focus on helping the unemployed transition to new jobs. The government adopted an ambitious reform program in August 2021, including measures to boost infrastructure investment and improve the business environment. Timely and effective implementation of the program would strengthen productivity and make the recovery more sustainable.
"After a strong fourth wave of the pandemic in the summer, the number of infections and severe cases started to recede at the end of September. In response to the fourth wave, the government tightened some gathering restrictions, albeit with limited impact on economic activity, and launched a booster vaccination campaign in August. The campaign offered third vaccinations to the elderly first and to all people above 12 years quickly thereafter. As of mid-November about 43% of the population had received a booster vaccination. Since October, a number of indoor activities require a third vaccination."
In terms of global growth, the OECD said that the economic recovery is "strong but imbalanced." The OECD predicts global GDP growth of 5.6% in 2021, down from 5.7% in its previous forecast. The OECD sees global growth of 4.5% in 2022, unchanged from its previous forecast.
Published by Globes, Israel business news - en.globes.co.il - on December 1, 2021.
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