IMF revises up Israeli growth forecast to 4% for 2011

Port2port News Service 
Feb 1, 2010 
 
The Israeli Finance Ministry estimates last week that Israel's economic growth was at an annualized 4.3% in the fourth quarter of 2009
 
The world economy is recovering at a healthy pace but still needs government stimulus efforts to keep it going, the International Monetary Fund said last Tuesday in its latest forecast.
 
The IMF raised its forecast for world economic growth in 2010 to nearly 4%, up from an estimate of 3.1% last October. It expects the U.S. economy to grow by 2.7% this year, significantly higher than its previous forecast of 1.5%.
 
International Monetary Fund forecasts for Israel, sees economic growth nearly doubling to 4% next year as exports, consumption and domestic credit recover from the global financial crisis. 
In its annual review of Israel's economy, the IMF said 2010 growth was projected at 2.5%, up from 0.1% in 2009.
 
An IMF staff report cautioned, however, that Israel's economy was not yet out of the woods and the outlook depended on a recovery in output in the world's major economies.
 
The IMF noted that public debt in Israel was high and expected to rise in the near-term before declining, while upward pressure on Israel's shekel currency could pose new risks for the economy. IMF estimates put the value of the currency "on the strong side”.
 
The Fund urged the authorities to introduce changes to fiscal rules that set explicit medium-term debt targets. It also said 2010 public sector wage settlements should "be tightly restrained."
 
"High Israeli public debt represents an enduring vulnerability," the IMF staff report said.
 
The Israeli Finance Ministry estimates last week that Israel's economic growth was at an annualized 4.3% in the fourth quarter of 2009, the fastest pace since the first quarter of 2008, when the economy grew by 5.5%.
 
The Ministry's estimates is the first official estimate by a public body for the final quarter of 2009. The second and third quarters of 2009 ended with 1.1% and 3.0% growth respectively. The estimate was included in the Ministry's published review of 2009.
 

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