'Situation in EU better.' Fischer
Photo: Gil Yohanan
Fischer: Economy can withstand US recession, but not crisis
Bank of Israel chief predicts low growth rate in 2012; says dissolution of euro zone not likely
"We are not on the brink of the dissolution of the euro zone or a crisis in the US, but we cannot predict what the next year or two will bring," Bank of Israel Governor Stanley Fischer told a conference held at Bar-Ilan University.
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"What we are seeing in Europe is the continuation of the 2007-8 crisis. The situation in the euro zone has improved, but it is still bad," Fischer said.
"We are seeing some positive signs in Europe, such as the central bank's policy of expansion. If the US succeeds in solving the budgetary problem after the elections, it will be able to return to a growth rate similar to that which was recorded in the years before the crisis," he said. "But the problems in Europe run much deeper. Some believe there are countries that would fare better without the euro bloc (…), but they joined the bloc due to inflation problems."
Addressing Israel's economy, Fischer said he expects a relatively low growth rate in 2012 and a "certain recovery" in 2013, depending on developments in Europe. "Most of the uncertainty in the market stems from global developments," he added.
According to Fischer, Israel's economy would be able to sustain a recession in the US, "but it will be much more difficult to deal with a financial crisis (in the US)."
The Bank of Israel governor also discussed poverty in Israel, calling it a "very serious problem.
"We cannot continue along this path. There are complications which I do not want to get into, but there is a constant rise in the level of poverty in the haredi and Arab sectors," the central bank chief told the conference.
The original article was published by Calcalist
