If Israel were to practice persistent and thorough economic and monetary restraint, its inflation rate could be brought down from last year’s ill percent to 30 percent in one for two years, Dr. Arnon Gatny, Governor of the Bank of Israel, said here today.
He did not expect that to happen this year, not least because the current wave of oil price rises were similar in their severity and international effects to those of 1973-74, he said. Nevertheless, he believed some progress was being made, as a result of the tough measures imposed by Finance Minister Yigal Hurwitz.
The inflation rate of increase in the first quarter of 1980 had dropped from eight percent to five percent, he said, but it was not certain that this progress would be maintained.
Gatny, who arrived here from a gathering of central bankers in Basle, also mentioned other “rays of light” an Israel’s economic horizon. in the first quarter of 1980, Israeli exports increased in dollar terms by between 40 and 50 percent. Last year they rose by 30 percent in dollar terms and ten percent in volume.
But such successes were heavily overshadowed by the rising oil costs, which last year were equal to eight percent of Israel’s real national income. Such a burden could not possibly be offset by bigger productivity in one year, he added.
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