The Bank of Israel revised the macroeconomic forecasts for 2009 and 2010
On 1 September 2009, the Bank of Israel revised the macroeconomic forecasts for 2009 and 2010 upwards as a result of positive information regarding economic activity in the second quarter of 2009, both globally and in Israel and in the light of improved forecasts of global growth and world trade.
Based on National Accounts figures for the first half of 2009 and on economic indicators of the last few months, it appears that the decline in economic activity that had been expected to end only at the end of 2009 had effectivively ended in the second quarter. A similar pattern emerged also in other advanced economies. GDP increased in the second quarter at an annual rate of 1 percent with increases in exports and in private consumption. Unemployment continued to rise in the second quarter, however, and reached 8 percent, with a further decline in the number of employees. This in line with the known lag which generally characterizes labor market developments.
The forecast for 2009
- The forecast was adjusted upwards - GDP is expected to settle at its average 2008 level.
- The average rate of unemployment in 2009 is expected to increase to 8.1 percent.
- A large surplus in current account, expected to reach about U.S. $ 7 billion, is forecast, as a result of the considerable improvement in terms of trade and the steep decline in imports.
The annual forecast implies a quarterly path of moderate growth of about 2.5 percent per quarter, annual rate, during the rest of 2009, and a slow increase in unemployment in the second half of the year.
The forecast for 2010
- GDP is expected to grow by 2.5 percent.
- Unemployment is expected to increase slighghtly to 8.3 percent.
- Growth will be led by exports, which are expected to increase by 6.3 percent (excluding diamonds), with a lower increase, 2.7 percent, in domestic uses, mainly due to slow recovery of investment in the principal industries, whose share in GDP is expected to remain low.
The large surplus in the current account in 2009 is expected to contract somewhat in 2010, due partly to a deterioration in the terms of trade and partly to a deterioration in the terms of trade and partly to a higher increase in imports, 6.9 percent, than in uses, representing a correction for the heavy drop in the weight of imports in total sources in 2009.
