OECD warns on judicial overhaul

Growth credit: Shutterstock
Growth credit: Shutterstock

Judicial independence and checks and balances are vital for a strong system, the OECD stresses.

Israel's GDP growth will be 3% in 2023 and unemployment 4.3%, the OECD predicts. Israel's economy grew by 6.4% in 2022 and unemployment was 3.8%. In 2024, the OECD sees 3.4% growth in the Israeli economy with unemployment remaining at 4.3%. The OECD's 2023 growth forecast of 3% is identical to the forecast of the Ministry of Finance and Bank of Israel.

The report released today, "OECD Economic Surveys: Israel 2023", which examines the Israeli economy, is the latest edition of a survey published every two years. The OECD is concerned about real estate risks, which it says should be monitored closely, mainly due to the rise in interest rates over the past year. The OECD mentions that the level of problematic loans is still low and that the loan to capital ratio is "above the regulatory minimum," but the report also stresses that the price of property has risen rapidly in recent years and "exposure of banks to the real estate sector is high and requires monitoring."

The report notes that the average level of corruption in Israel is high compared with other OECD member states and even refers to the independence of the judicial system. It states on page 29: "Judicial independence and judicial checks and balances are vital for a strong anti-corruption system, trust in the government and public institutions and a business environment that attracts investments and fosters economic performance."

"Israel's economy is recovering swiftly from the pandemic and has proven resilient to the consequences of the war in Ukraine," the OECD report says. "Inflation has risen above the central bank's target range due to strong demand and a tight job market. In response, the Bank of Israel has tightened monetary policy and hiked interest rates."

The OECD has called on Israel to maintain a low fiscal deficit and not to add to inflationary pressures. The report also cites the demographic challenges in Israel and that it is necessary to invest in strengthening productivity and reducing social gaps and that increasing productivity can be implemented by reducing the gap between the tech sector and other sectors.

Published by Globes, Israel business news - en.globes.co.il - on April 3, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

Growth credit: Shutterstock
Growth credit: Shutterstock
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