OECD updates growth forecasts for Israeli economy

The OECD predicted that Israeli gross domestic product would shrink by only 2% in 2009 and rise by 0.2% in 2010
 
The Organization for Economic Cooperation and Development (OECD) released last week an updated forecast for the Israeli economy as part of its overall global forecasts.
 
The OECD predicted that Israeli gross domestic product would shrink by only 2% in 2009 and rise by 0.2% in 2010.
 
The OECD said Israel's financial markets had few problems and there was no local real estate bubble. However, Israel's heavy exposure to international trade was the cause of the shrinking economic growth.
 
The OECD's numbers also forecast 2.5% inflation this year and 1.1% in 2010, and unemployment of 8.5% and 9.3% respectively.
 
It should be noted that these figures are lower than the Bank of Israel's new forecasts released last week of zero economic growth in 2009 and 2.5% next year.
 
The OECD also raised its forecast for the G7 countries to a 3.7% drop, instead of the former negative 4.1% predicted growth.
 
Late last month Deutsche Bank forecast higher GDP growth for Israel in 2010. Analysts at Deutsche Bank revised their global economic growth forecast upward for the first time since the beginning of the global financial crisis, and predict that Israel's gross domestic product will grow 2% in 2010, after falling 1.1% in 2009.
 
The Bank of Israel's 2010 forecast projects 1% economic growth Deutsche Bank in the same report also said it expects Israel's inflation, as measured by the Consumer Price Index (CPI), torise 2.1% in 2009, but at a slower rate of 1.9% in 2010. Deutsche Bank analysts see global economic growth of 2.5% in 2010, compared with their previous estimate of 2% for that year.
 
They noted that the higher global growth forecast is entirely based on stronger expected growth in industrial countries with two factors pushing in this direction - a better outlook for investment growth, and better export growth. Israeli industrial exports, excluding diamonds, rose 23% in June from May, while high-tech exports rose 25%.