Deputy Bank of Israel Governor Prof. Zvi Eckstein: Fiscal stability will support 4-5% long-term annual growth.
Deputy Governor of the Bank of Israel Prof. Zvi Eckstein said that Palestinian terrorism cut Israel’s GDP by 12% in 2002-03, cut private consumption per capita by 3.2% and exports and investment by 14%. He made the comment during an economic conference on Friday.
Eckstein said that the current economic climate made it possible for the Bank of Israel to keep a low interest rate of 4%, while maintaining price and financial market stability. He noted the improvement in Israel’s risk premium on international markets and the surplus in the balance of trade current accounts. He said the shekel’s appreciation and the fall in global oil prices in the second half of 2006 contributed to 0.8% deflation in the past 12 months.
He said fiscal stability would support 4-5% long-term annual growth. He insisted on the need to streamline financial markets and make them more efficient, “in order to ensure efficient consumption, investment and production.”
Published by Globes [online], Israel business news - www.globes.co.il - on April 1, 2007
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