Karnit Flug, Bank of Israel Governor, submitted last March 28 its annual report to the President, the Prime Minister and the Minister of Finance. The opportunity for EcomnewsMed to select five important points.
Karnit Flug with President Reuven Rivlin in 2014.
” I thought it will be proper to take the opportunity to mention the amazing achievements made by the Israeli economy in the 70 years, “ said Flug during the report presentation press conference. Indeed the country has good economic results as for example a labor market close to full employment rate. We select for you five important points from the chapter one entitled: The Economy and Economic Policy :
– GDP grew by 3.4 percent in 2017, similar to the growth rate in the previous year, and higher than the potential growth rate (about 3 percent). The improvement in the global economy contributed to an acceleration of the increase in uses, and to the increasing share of exports in total uses at the expense of private consumption.
– The job vacancy rate increased in most industries and in most professions, and the unemployment rate is lower than in the past, even in the periphery and among individuals with low education levels. Real wages increased at an accelerated pace in the past three years.
– Investment expanded rapidly in the past two years, in parallel with a decline in the rate of savings. The surplus in the current account therefore declined.
– Increased competition and price reductions initiated by the government moderated inflation. Inflation remained lower than its target range, and lower than inflation abroad, inter alia because the shekel appreciated while Israel adopted a less accommodative monetary policy than some of the other advanced Economys. In contrast, the limitation of Israel’s production capacity and the increase in commodity prices contributed to the acceleration of price increases in Israel to positive territory. Short-term inflation expectations are lower than the target, but expectations for the third year and onward are within the target range.
– The public debt to GDP ratio declined, inter alia thanks to one-time tax receipts. The government increased expenditures and reduced taxes while increasing the structural deficit.
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