Israel’s economy is finally showing signs of recovery and growth, according to the latest reports released by the Central Bureau of Statistics.
The news is music to the ears of the Likud, which has been been struggling to retain its supremacy as Israel’s ruling party.
Industrial production rose by an astonishing 7 percent last year. Industrial exports and imports of raw material for industry were both up. Productivity as a whole was up 2.5 percent and the state deficit was only half of what it was expected to be.
Although the foreign currency deficit rose by $1 billion, more money found its way to Israel by other routes, and the foreign currency reserves actually increased.
The gross national product rose by 6 percent last year in proportion to the growth of population. It was 1 percent higher than in 1990.
On the basis of those figures, the Central Bureau expects further improvements in the economic picture. Three weeks before an election, there could be no better news for the incumbent party.
But then the Bank of Israel chimed in with a deafening discordant note. It is Israel’s central bank — its functions similar to the U.S. Federal Reserve or the Bank of England — and its 1991 annual report, just released, presented a grim picture of an economy confronted by its worst crisis ever.
High unemployment and no economic growth was its forecast for the immediate future.
Analyzing the 7 percent rise in industrial production, double the previous year’s, the Bank of Israel said it was the function of a temporary boom in the housing and allied industries not likely to be sustained.
Subtract that and last year’s industrial growth would have been a meager 3 percent, much less than planned, the bank reported.
Moreover, it upheld the scathing criticism of the Housing Ministry’s performance, contained in the state comptroller’s report released last month.
According to the Bank of Israel’s annual report, the government’s “exaggerated” housing efforts “caused waste of resources and increased economic uncertainty by putting the focus of economic activity on the building industry, which cannot sustain long-term economic growth.”
13,7 PERCENT INFLATION RATE
One of the main complaints in the comptroller’s report was that the state invested too much in housing and too little to create job opportunities.
As a result, the unemployment rate rose to 11 percent, creating a situation in which thousands of housing units remain vacant because they were built in places where no work is available, particularly in the south, the Bank of Israel said.
According to the bank, the unemployment situation is unlikely to improve because many immigrants lack the ability to adjust to a modern economy.
On the more positive side, the central bank reported that last year’s inflation rate was down to 13.7 percent, after deducting housing costs, the price of vegetables and government levies.
But the report added that the policy-makers have only slight influence on maintaining a relatively low rate of inflation.
The Bank of Israel predicted, moreover, that the economy would slow down even more this year, bad news for the party in power on the eve of elections.
Since the beginning of the year, investments have dropped, housing is down, exports are down, trade volume is down, unemployment is up and agriculture is still suffering the aftereffects of an exceptionally harsh winter, the bank report said.
Economists also point to the decrease of aliyah as one of the main factors responsible for the economic slowdown.
Massive immigration from the former Soviet Union, which at times reached 20,000 a month, was expected to fuel an economic boom with new demands for housing and other necessities of life.
But the country failed to offer the newcomers jobs, and aliyah from the former Soviet republics fell to a record low of 3,360 last month.
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