Israel is looking toward a better 2007.(Brief article)

The Bank of Israel (BOI), Israel's central bank, revised its growth for 2007 upward from its previous forecast of 4.6 percent to 5.1 percent. The GDP forecast change represents a rise of 0.5 percent. In a March 19, 2007 press release, the BOI said that the main reasons for the forecast change were signs that GDP was growing rapidly, and-particularly important for Israel's consumers-the sharp fall in the rate of unemployment in the final quarter of 2006.

The BOI said unemployment was expected to fall to an average 7.5 percent for all of 2007. The unemployment rate in 2006 was 8.4 percent, and in December 2006 the BOI thought unemployment would be 8.1 percent in 2007. In 2005 unemployment was 9.0 percent.

The BOI said it made its decision based on information derived from the most recent National Accounts data, along with the country's Manpower Survey and Company's Survey both published in December 2006. Monthly indicators of economic activity for January 2007 and February 2007 were also consulted.

Other detail that convinced the BOI to change its forecast included a rise in private consumption. The BOI increased its forecast of private consumption from 4.0 percent, which it published in December 2006, to 4.4 percent. Private consumption for all of 2006 grew 4.8 percent compared with growth of 3.4 percent in 2005.

More positive signs came from Israel's housing sector. The BOI said it was influenced to think more positively because of: "The fact that the upward trend in investment in housing is becoming more firmly based, reflected by the rise in the area of housing starts and the rise in the number of residential building permits."

Print Get the Mag Weekly Updates