Israeli Economy Sees Record-Breaking Positive News

The Israeli economy has seen a series of record-breaking positive statistical indicators in 2006. Bank of Israel economists credit ex-Finance Minister Netanyahu with the 2003-4 economic revival.

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Nissan Ratzlav-Katz, | updated: 08:39

A report issued by the Central Bureau of Statistics on Tuesday showed that foreign direct investment in Israel tripled in the first nine months of 2006, reaching a record high of $9.6 billion, with financial investment doubling to $6.7 billion over previous periods.

Export surplus reached $1.5 billion in six months of trade in 2006. Third-quarter statistics for 2006 showed that Israel's balance of payments surplus grew to a record $2.4 billion, a one-third increase over Q2.

Addressing the Israel Business Conference on Tuesday, Bank of Israel Governor Stanley Fischer said, "It appears that the rate of growth in 2006 will be 4.8%, slightly higher than our initial post-war forecast. Our forecast for 2007 still indicates healthy growth of 4%." Drawing attention to Israel's open economy, Fischer cited statistics that Israeli investments in foreign markets reached about $21 billion by the end of November, including a record-breaking $12 billion in direct investments. He also noted that Israel is in second place, after the US, in terms of the number of companies listed on the Nasdaq stock exchange.

Continuing his praise of the Israeli economy, Fischer said, "In this context I would like to mention the Doing Business Report of the World Bank, which grades countries according to the ease of doing business in them. Israel is listed 26 out of 175, not bad at all."

Netanyahu's Role
In other economic news, economic reforms initiated by Binyamin Netanyahu, a former minister and the current opposition Likud party leader, were cited by Bank of Israel researchers on Tuesday as a significant cause of the rejuvenation of Israel's economy in 2003.

The Israeli economy, which had been shrinking in previous years, saw a 4.2% growth spurt in 2003-4. Researchers Dr. Karnit Flug and Dr. Michel Stravinsky noted that external factors were responsible for two-thirds of the improvement in Israel's economy, according to a report in Haaretz.

"International trade, immigration and improved security are the most significant factors in creating sustained growth within the Israeli economy," the Bank of Israel economists said.

Netanyahu was appointed finance minister in 2003 by then-Prime Minister Ariel Sharon. Netanyahu's policies in the ministry included several unpopular measures. Many critics of his reforms said that they were excessively harsh towards the weaker socioeconomic sectors. However, Netanyahu earned the praise of the American government and the international business community for strengthening Israel's economy.