The government’s economic recovery plan is beginning to show results. It has already had a strong impact on inflation, exports are up, imports are down and there is renewed public confidence in the economy overall, according to a background report released by the Treasury today.
The inflation rate is declining for the first time in recent years, the report noted. The monthly rate is down from a 15 percent average to an average of 3-4 percent. Last month the inflation rate increased by just one half of one percent.
Private consumption is down by 1.1 percent for the first half of 1985, the Treasury says, and is expected to drop by three percent when the year ends. The government has pared its budget. Subsidies for basic foods and services have been cut. Vacant jobs have not been filled. Fuel and electricity prices have gone down for the first time in 20 years. The four percent reduction in the cost of fuel may lead to a $60 million increase in the gross national product as a result of lower production costs.
Imports have declined six percent, mainly appliances and luxury goods, the Treasury reported. Exports are up by seven percent this year. In October industrial exports were 31.7 percent higher than in October of the previous year.
The controversial $300 per capita travel tax imposed during the summer months has had spectacular results, leading to substantial savings of foreign currency. According to the Treasury report, 48 percent fewer Israelis went abroad last July than in July, 1984. This translates into an annual figure of 288,400 fewer Israelis spending badly needed dollars overseas this year.
The report, entitled “The Economic Turnaround,” maintains that public confidence has been buoyed as a result of the government’s economic policies. The private sector no longer sees a need to invest in foreign currency as a hedge against inflation. The black market rate is low and foreign currency reserves are on the rise after months of decline.
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