The Cabinet was told this week that Israel’s economy is booming but that private consumption should be curbed and the rise in living standards slowed down if the country is to continue to hold the line against inflation. The Cabinet heard from Finance Minister Zeev Sharef and David Horowitz, governor of the Bank of Israel, who reported at a special session devoted to economic matters.
They said the gross national product would rise by 11 percent this year and that industrial output will increase by 16 to 18 percent. But Israel’s foreign currency reserves will decrease by $100 million to a $550 million level. Price stability was maintained more or less during the past year even though wages and salaries rose by an average of three percent, but the rise was accompanied by an increase in productivity. The main task, according to the Finance Minister and Israel’s chief banker, is to encourage private saving and curb public spending on non-essential projects. They said it was not possible to slow the pace of economic expansion because of defense needs and the need to absorb more immigrants.
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