Improved outlook for global growth and world trade (illustration)
Photo: Index Open

Israel raises growth forecast for 2010

Central bank expects economy to grow 3.5% this year, compared with its previous September forecast of 2.5%

Israel's central bank has raised its economic forecast for 2010, citing an improved outlook for global growth and world trade.


The Bank of Israel now expects the economy to grow 3.5% this year, compared with its previous September forecast of 2.5%.


The bank said the recovery of the global economy has increased demand for Israeli exports, though it cautioned that it could scale back the forecast if the recovery slows.


Israel has for the most part weathered the world financial crisis, thanks largely to a conservative banking system that had little exposure to mortgage-backed assets or risky loans.


The Bank of Israel was among the first in the developed world to raise interest rates after the global economic crisis.


On Sunday, Merrill Lynch also raised Israel's economic growth forecast for 2010 to 3.5%. The American bank's economists also estimate that the interest rate will rise, reaching 2% in March.


The economists noted that Israel's economy continued to provide surprises after what they defined as a "shallow" recession in the beginning of 2009, and note that exports will continue to improve and serve as an important growth engine for the coming year.


Merrill Lynch estimated that the inflation rate would total 3.6% in 2010, with a sharper rise in the consumer price index expected in the coming months. The economists noted as one of the reasons for this the 25% increase in water prices, which went into effect in January.


Gil Kalian contributed to this report


פרסום ראשון: 01.12.10, 08:07
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