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Encouraging Economic News from Israel: Government Reports Balance of Payments Gap Has Narrowed and I

The government produced some encouraging economic news over the weekend. Israel’s balance of payments gap has narrowed and its industrial production is up. Government spokesmen claimed at a press briefing yesterday that this proved the economic situation is not as bad as depicted by the media.

Some economists cautioned, however, that such an assessment based on limited economic indicators was questionable. The Central Bureau of Statistics, meanwhile, released figures today showing that real wages increased by seven percent last year with a commensurate rise in private consumption of 7-8 percent.

The harbingers of economic good tidings were Moshe Mandelbaum, Governor of the Bank of Israel, and Minister of Commerce and Industry Gideon Part. Mandelbaum reported yesterday that the deficit of exports to imports stood at $131 million in September compared to $263 million in August and $139 million in September, 1982.

The improvement was the result of reduced imports rather than a rise of exports. Imports in September amounted to $382 million compared to $511 million in August and $425 million in September 1982.

EFFORT TO COOL THE CRISIS

Patt reported at yesterday’s Cabinet meeting that industrial production was up 2.5 percent in the first six months of 1983 compared to the same period of 1982. He said in the second quarter of this year, production rose by 7.5 percent over the second quarter of 1982.

The government played up this economic news in an effort to “cool” the crisis atmosphere created by recent collapse of bank shares and the sharp devaluation of the Shekel. But the figures on consumption made public today may give pause to those who recall Premier Yitzhak Shamir’s warning in his inaugural Knesset speech just a week ago that Israelis have been living beyond their means.

According to the Central Bureau of Statistics, the purchase of private cars by Israelis increased by 90 percent over the past two years. In the first eight months of this year, Israelis bought 70,000 private vehicles — equal to the total purchased in all of 1982. By the end of this year, the number of new cars on the roads is expected to reach 100,000.

Whether the buying spree continues may depend on Shamir’s ability to institute the austerity regime he claimed was vital to economic health.

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