Tyrah: in 2005 economy will grow 3.8%, and unemployment will be leveled at 10%

The outgoing president of the Manufacturers Association Mr. Oded Tyrah, who finished his six years term of office last week, said in a press conference that the Manufacturers Association predicted 3.8% growth in 2005 ( 4.2% in 2004 and 1.3% in 2003 ), 5.2% increase in business product ( 6% increase in 2004 and 1.7% in 2003 ), and 10% unemployment.
 
He called upon the government to set up an unemployment target of 9.4%.
 
Tyrah pointed out that 80% of growth in 2004 was in high-tech, even though it accounts for a minority of Israel's labor force. In contrast, low technology industries contributed only 6% to growth and account for 25% of output, even though they employ 300,000 of Israel's 340,000 industrial employees.
 
In order to create balanced growth, Tyrah said the government should allocate NIS 4 billion a year for growth (R&D, capital investment, exports, and encouragement of small and medium-sized enterprises), compared with the current NIS 2 billion. He said a budget supplement for R&D was more important than tax cuts on individuals. Tyrah stressed the importance of growth in investments as a sign of the public's confidence in a stable future. The state's Investment Encouragement Law will be "an extraordinary breakthrough" and "an asset for generations to come," eliminating much unnecessary bureaucracy for prospective investors, he noted.
 
Tyrah added that "Israel is not attractive enough in the world today," and noted that Israel was rated 50th in terms of the number of foreign companies active in the country, with only 131. in comparison Ireland is placed 34th, with 1,225 foreign companies, and Singapore seventh with 14,052 foreign companies active in its territory.
 
Meanwhile, despite a rather grim outlook the Manufacturers Association predicted that in 2005 the rate of employment will rise 2.6%, reflecting some 62,000 Israelis joining the work force. Employment in the business sector in 2005 is expected to rise 4.5%, while that of the public sector holds stable. Israel's GDP per capita for 2005 was seen to rise 2.1%. The association also predicted that the business GDP will grow 5.2% in 2005, down from its 6% rise in 2004. Exports of goods and services are expected to grow some 8.1% in 2005, significantly less than their 2004 growth of 14%. Investments in fixed assets in 2005 are expected to rise for the first time in four years, by 2.6%; They fell by 1.8% in 2004 and 7% in 2002.