BOL: economic slowdown following a U.S. recession could lower GDP growth in Israel

The relatively sharp decline in economic growth is expected, according to economists, due to the credit crisis and rising oil prices
 
The Bank of Israel (BOL) raised last week its growth forecast for 2008. Assuming that the repercussions of the sub-prime crisis will be relatively moderate, in accordance with the forecast published by the IMF in October.
 
The BOL said last week that if a global economic slowdown did take place, following a U.S. recession, the GDP growth in Israel would slow down to just 3.6% in 2008. The BOL noted, however, that if the global economy doesn't slow, then Israeli GDP will grow by 4.4% in 2008. 
 
The bank added that economic growth in 2008 will be slower than estimated for 2007 - 5.4%, and lower than it was in 2004, 2005 and 2006 where growth rate was 5.1%, 5.3 and 5.2% respectively.
 
The relatively sharp decline in economic growth is expected, according to economists, due to the credit crisis and rising oil prices. The treasury expects growth rates of 5.4% for 2007, and 4.2% for 2008.The slower increase in activity would lead to a rise in the unemployment rate to 8.2%, and to an increase in the general government deficit to 0.9% of GDP.