Unemployment in Israel will climb to 77,000 or six percent within two years, according to a forecast by the Ministry of Finance’s Economic Planning Authority (EPA). The prediction was contained in a forecast for the years 1976-80 which was presented to the Cabinet. The EPA also predicts that there will be no growth in personal consumption through 1980 by which time the national debt will have risen from $6 billion to $10 billion and interest payments will be eating up $1,5 billion a year.
The EPA survey recognizes that the main bottleneck in the economy is a shortage of foreign currency, which thus limits growth. The most difficult year ahead, according to the forecast, is 1977 when consumption which fell in the first quarter of this year, will go up by about one percent because of the tax reform and the cost of living allowances paid to Israeli workers. Output is expected to increase relatively slowly during the next three years, 3,4 percent in 1975, 4 percent in 1976 and 5 percent in 1977. During this time unemployment will worsen.
The experts point out that these figures are not planned and a 4,5 percent correction would be sufficient to secure the necessary structural shifts. However, they stress that there is not enough foreign exchange available to keep production at full tilt for the domestic market. The EPA experts also stress that while six percent unemployment is distressing it is loss than the current rate in Europe. They said that unemployment will drop after 1977 providing the necessary belt-tightening discipline is accepted by the people and the government.
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