Finance Ministry: Israel economy to slip 1% in '09

The Bank of Israel believes the economy will weaken even more, estimating a contraction of 1.5 percent in 2009 and growth of 1 percent in 2010
 
In a presentation to the Cabinet as part of discussions on the 2009 and 2010 budgets, Israel's Finance Ministry forecast that Israel's economy is expected to contract by 1% in 2009.
The ministry projected, however, 1.5% growth next.
 
It expects unemployment, which reached a rate of 6.8% in January, to rise to 7.6% in 2009 and 8.5% in 2010.
 
The Bank of Israel believes the economy will weaken even more, estimating a contraction of 1.5 percent in 2009 and growth of 1 percent in 2010.
 
The economy is deteriorating largely due to slowing exports, which account for nearly half of Israel's economic activity.
 
The Bank of Israel said last Sunday that Israel's economic performance index, or "S" index, slid 0.9% in March. The bank noted however that although it is the eighth straight drop, the drop was less than the falls in previous months.
 
The composite index reflects several components. The trade and services revenue index fell, as did imports of goods. However, goods and services exports rose, including a slight rise in manufacturing production.
 
The composite state-of-the-economy index is a synthetic cyclical indicator for examining the direction in which real economic activity is moving, in real time.
 
The index was calculated from the monthly changes in five components that reflect different aspects of real economic activity: the index of manufacturing production; imports, excluding capital goods; trade and services revenue; the number of employee postsin the business sector; and goods exports (excluding agriculture, fuel, diamonds, and ships and aircraft).
 
In a statement issued by the Bank it said: "The decline in the index this month testifies to a drop in activity, continuing decreases that started in the last quarter of 2008”.