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Three international investment houses have issued a rosy forecast for the Israeli economy, which one firm says is at the beginning of a decade of constant growth following this year’s recession. The biggest question mark is inflation, which to a certain extent will depend on the topsy-turvy crude oil market.

One source that is less optimistic about economic growth is the International Monetary Fund (IMF), which estimates the Israeli economy will grow by only a fraction of a percent next year. The Bank of Israel, which failed to foresee the depth of the current recession, predicts that growth will be one percent.

As every unemployed Israeli knows, 2009 has been a tough year as the country suffers through a recession following five years of unprecedented growth and record low inflation that often dropped below zero. The global financial crisis that began nearly two years ago has extended to every corner of the globe.

However, economic growth in Israel in 2010 is expected to outstrip that in other industrialized countries, according to Deutsche Bank. It has upped its projected rate of growth for next year in Israel from 2 percent to 2.5 percent, compared with only one percent for other advanced countries. Inflation is expected to be around 2 percent both this year and in 2010, Deutsche analysts predict.

Merrill Lynch estimates that the Israeli economy will grow by a very healthy 3.5 percent annually for the next 10 years, citing local demographics, savings, human resources and more open trade regulations.

The British-based Barclays Bank’s crystal ball also is rosy, with a predicted growth of 2.9 percent next year. Similar to other investment advisers, the bank sees rising exports as a driving force behind the expected recovery.

The battered high-tech industry will be one of those to enjoy resumed growth after this year's layoffs of thousands of workers in Israel.

Barclays also predicts that the shekel-dollar rate will drop to NIS 3.65 to the dollar by the end of this year, 10 percent lower than the current rate. A lower rate is damaging to exporters, who receive fewer shekels for their dollars. Bank of Israel Governor Stanley Fischer last year went on a spending spree to buy dollars in order to prop up the rate, which had declined to less than NIS 3.25 to the dollar. Barclays predicts that the Bank will phase out the program to buy dollars.

A return to growth also will take some of the pressure off the Finance Ministry as projected tax revenues increase and help lower the government deficit.