The Israeli economy will recover from its current slowdown and return to 3% GDP growth next year, predicts the OECD in its latest economic forecast summary for Israel. The OECD calls on Israel to refrain as far as possible from further budget cuts for social affairs ministries, "The authorities’ commitment to resume fiscal consolidation in 2016 and to pursue the goal of reducing government debt is welcome. But civilian budget expenditures, notably already relatively low education and social spending, should be protected from cuts as much as possible."
In its forecast the OECD said, "After a pronounced but temporary weakening in 2014, growth is projected to rebound to about 3% in 2015 and 3.5% in 2016, which should avert any rise in unemployment. The rebound in domestic demand that is expected to follow the end of the Gaza conflict, the projected strengthening of the external environment and the recent weakening of the exchange rate will sustain activity." Hinting that the OECD supports the policies of Minister of Finance Yair Lapid, the OECD added, "The economy should also be supported by ever-lower interest rates and a pause in fiscal consolidation in 2015."
The OECD also said, "Falling prices call for continued expansionary monetary policy to facilitate the recovery. Even so, there needs to be continued vigilance as to the risks of overheating in the real estate market that this policy can induce."
Published by Globes [online], Israel business news - www.globes-online.com - on November 25, 2014
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