JERUSALEM (Jun. 24)
Israel will reverse its go-slow economic policies of 1967 and embark on large scale economic expansion this year despite an increased foreign trade deficit that such a policy may incur, it was learned from Treasury sources here today. A principal reason for the change is the need for a rapidly expanding economy to attract more immigrants from the West. Another reason is the huge defense expenditure which has exceeded previous estimates for this year by about $145 million.
The policy change is a response to reports by researchers who said that only dynamic economic growth can create the conditions necessary to absorb newcomers and find them jobs. But as a result, Israel’s foreign trade deficit is expected to rise from $425 million in 1967 to $550 million in 1968. The new policy will also affect the annual growth rate of Israel’s gross national product.
At the world economic conference called here earlier this year by Prime Minister Levi Eshkol, it was reported that the GNP was expected to rise by 11 to 12 percent during the current fiscal year. That estimate was scaled down to between six and eight percent following a warning by David Horowitz, governor of the Bank of Israel, that inflationary tendencies were in evidence. But the estimate was revised upward again following consultations by a Ministerial committee on economics. The new policy is expected to speed up economic activity to the 1966 pace. At that time, the Government ordered a slowdown because of rising inflation.