Treasury lowers Israel's 2016 growth forecast

Yoel Naveh

Ministry of Finance chief economist also raised state revenues forecast and cut the deficit forecast.

Ministry of Finance chief economist Yoel Naveh today lowered his 2016 economic growth forecast by 0.1% to 2.8%. On the other hand, he also upwardly revised his revenue forecast by NIS 1.4 billion and his deficit forecast to 2.8% of GDP, compared with the state budget target of 2.9%.

Naveh raised his forecasts for salary growth and unemployment. A more significant revision was made in the 2016 inflation forecast, which is now minus 0.3% as a result of the drop in the prices of imported inputs and government measures to lower the cost of living.

State revenues from taxes and fees are projected to rise slightly, given the increase in revenue from indirect taxes, reflecting the upward revision in projected private consumption. On the other hand, the forecast for revenue from direct taxes was lowered, given the weakness in the capital markets. Miscellaneous revenues in 2016 are expected to total NIS 35.8 billion, NIS 800 million more than the forecast on which the state budget is based.

Adding up all the revised forecasts for state revenues from taxes and fees and the forecast for miscellaneous revenues gives a total revised forecast NIS 1.4 billion higher than the forecast on which the state budget is based.

The Ministry of Finance stresses that the presented forecasts are statistical, and may not materialize, depending on the global environment, competitiveness of the Israeli economy, private sector employment, volatility in asset prices, and the geopolitical situation.

Published by Globes [online], Israel business news - www.globes-online.com - on March 30, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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