JERUSALEM (Jul. 31)
The Bank of Israel reported today that Israel has suffered an economic slowdown during the first six months of this year. Industrial production was down five percent and private consumption decreased by the same figure, the Bank reported. Exports declined slightly although they had been expected to rise as a result of the 43 percent devaluation of the Israeli Pound last November and the further two percent devaluation last May.
The Bank’s report expressed particular concern over the export decline because exports are regarded as one of the most important means of reducing Israel’s balance of payments deficit which is currently, unofficially, estimated at IL 6 billion.
The Bank of Israel’s latest report refuted the optimistic statements of some of Israel’s leading economic experts, including former Finance Minister Pinhas Sapir, who frequently claimed that the world economic recession was felt less by Israel than by the Western countries.
One of the most ominous features of the report was the announcement that unemployment increased by 3.5 percent in the first quarter of the year, the biggest increase since 1971. The report anticipated a moderate continuation of this trend although its statistics supported Labor Ministry claims of a manpower shortage, especially in the industrial sector.
According to the Bank of Israel, Israel’s economic slowdown is due to the relative stability of world prices resulting from the production slowdown in the West which produced a negative effect on Israeli exports. The report cited as an example the Timna copper mines which has suffered from a sharp drop in world copper prices. The government’s economic austerity measures and continued price controls were credited for keeping prices at a moderate level in Israel.