Asked by the president whether he saw any signs that Israel was emerging from the crisis, he responded, "We see it in the financial markets, which have began recovering. But what we have yet to see is a recovery in the real economy (production and employment)."
He added, "We expect the decline to continue. I hope it doesn't last long, but there is always a delay between what happens in the financial markets and what happens in the real market. It also happened in the opposite direction – the financial crisis began in mid 2007, and we did not see the ramifications in the real economy for almost a year. I hope the delay will be shorter this time."
Fischer went on to say that although Israel stood firm in the face of the financial crisis, it has yet to end. "I believe we have dealt with this test and challenge very well, but we have yet to reach the end of the story, we have yet to reach the lowest point of the recession. We must continue this way."
He also elaborated on the report's main points: "This year's report addressed one of the most interesting years in the modern history of our economy. The interesting thing in the report is the question of what we have achieved in the past five years of growth.
"We've achieved a lot, and there are also things we haven't achieved. There was a significant drop in unemployment and poverty, but what we've failed to achieve is an increase it our relative income compared to the United States. In total, we grew per capita in a similar pace as others, and this is a very positive thing."
'2008 – one of economy's most difficult years'
Fischer later submitted the report to Finance Minister Yuval Steinitz. He told the minister that the growth was expected to slow down, but added that the main objective should be to establish conditions for durable growth, for the public's welfare and in order to deal with social problems.
The governor called on the Treasury to keep prices stable and maintain financial stability, saying that Israel has succeeded in facing financial challenges with these principles, which are relevant for years. He added that 2008 was one of the most difficult years experienced by the Israeli economy.
The government welcomed the full cooperation between the Bank of Israel and the Treasury for the benefit of the economy. Minister Steinitz replied, "It seems like we are old friends already, after nonstop meetings with the governor day and night. The governor has turned out to be not only a neighbor and an advisor of the Treasury, but also a friend."
Peres: We mustn't sink into melancholy
President Peres expressed his proficiency in the Israeli economy and revealed that he reads articles written by the world's greatest economist.
"I was surprised to read important economist saying they have reached the conclusion that there is an economic factor influencing the economy more than anything else and which they have no knowledge of: The state of mind," said the president, noting that there are ways to deal with a state of mind.
"I think that in Israel as well it's important not to sink into melancholy," he said.
"My impression is that compared to other countries we are above the average. I'm not saying we have not been hit by a crisis, but it looks like we are on the right track, at least in terms of regulation.
"We did not let greed determine the economy, but now I think that while there already are signs in other countries, here there should be torches. We must encourage the people," said Peres.
The president went on to elaborate on Israel's huge potential in the technological and high-tech areas, which could influence the State's financial situation and the economy, and praised Governor Fischer for his handling of the crisis.
"It's my duty to laud the bank's and your work personally, because you managed the financial crisis with integrity. There were successes, and even when there were failures you didn't hide them. You won something which is as important as money, and that's the public's trust. I am certain that together we will be able to emerge from the current crisis as well."
Zvi Lavi contributed to this report