Bank Leumi CEO Galia Maor predicts that 2009 will be a most difficult year for the Israeli economy, with high unemployment, bankruptcies, and household economic hardships.

At the same time, in what some are calling the “calm before the storm,” the latest national poverty report shows a drop of 0.7% (from 24.5% to 23.8%) in poverty levels.  The figures showing the first such drop in ten years were presented on Sunday by Welfare Minister Yitzchak Herzog.

The number of poor people in Israel dropped 2.7%, from 1.675 million in 2006 to 1.63 million in 2007.  The number of children under the poverty line decreased by 1.6%.

Maor: Tremendous Crisis

“This is a tremendous financial crisis,” Maor told a Bank Leumi conference audience on Sunday, “that is developing into a worldwide crisis of dimensions that have not been felt for many decades.  2009 will be a year of a genuine recession with a significant rise in unemployment, economic difficulties for households, and an increase in companies going bankrupt.”

Maor said that a modest growth rate of 2% in Israel’s economy in 2009 is foreseen, “which will not be enough to prevent increased unemployment.  But the proper economic policies can prevent unemployment from rising as sharply as it did at the beginning of this decade.”

More Welfare Cases

The Ministry of Welfare similarly predicts that the number of people who will require its help will grow by 100,000 to 150,000 in the coming year.  This, compared to the 1.2 million who are currently on the ministry’s rolls.

Maor joined in the popular criticism of the economic recovery plan submitted last week by Finance Minister Roni Bar-On: “The government must encourage long-term savings by individuals, as this is critical both for the entire economy and a social standpoint on the individual level. However, great losses have been suffered over the past few months…”  She implied that the government has not taken the proper steps to offset these losses.

Bar-On, submitting to the criticism of the prime ministerial candidates, the Histadrut and others, has instructed the Finance Ministry to prepare a plan that will help those who have retired or are about to retire to recover some of their recent pension-plan losses.