Economic Report Card; Satisfactory Employment Growth Marred by Too Much Spending in Private Sector

The Bank of Israel released its annual Economic Report for 1972 here yesterday, and while the picture was a generally satisfactory one of continuing growth and full employment it was flawed by excessive spending in the private sector and insufficient investment in exports.

Moshe Sanbar. Governor of the Bank of Israel, pointed out to reporters that more than 45 percent of the 10 percent increase in the gross national product last year went for private consumption while only 22 percent was channeled into exports. In 1971 43 percent of the GNP rise was invested in export industries.

The report noted a 6.6 percent rise in employment last year, largely a reflection of the continuing influx of immigrants from the Soviet Union. Sanbar said, however, that while full employment continued the labor market was beginning to show signs of slackness. He said there were no grounds to fear an unemployment situation such as developed in the 1966 recession because the government has several job-generating investment plans that can be implemented at short notice. Sanbar advised additional anti-inflation measures but warned against too many or too severe measures which could cause an economic slump.

DEBITS AND CREDITS OUTLINED

The Economic Report disclosed that imports rose by six percent last year while exports soared 18 percent. Imports totalled $3.360 billion and exports $2.284 billion. Imports of defense items were down 11 percent, Tourism, which rose by only 11 percent, was disappointing compared to the previous year’s rise of almost 50 percent. But foreign currency income from tourism increased 19 percent last year, reaching a total of $213 million.

Sanbar noted that Israel’s price index rose 13 percent in 1972 compared to a 10 percent average increase in Europe and considerably less in the United States. He said the price hikes effected both consumption at home and Israel’s competitive position abroad and noted that the latter area posed the greatest danger of inflation.

While Israelis were studying the Economic Report for 1972, participants in the Prime Minister’s Third Economic Conference were working on projects for the years ahead. Finance Minister Pinhas Sapir told the delegates last night that Israel would soon establish its first international mutual fund, an investment channel proposed the other day by Yaacov Levinson, director general of the Bank Hapoalim.

Dr. Sidney M. Edelstein, head of the Dexter Chemical Corp. of New York, announced that his firm would set up an IL 4.5 million chemical industries center in Israel that will utilize Dexter patents and know-how to produce chemicals used by the textile, paper paint, metal and cosmetics industries.