Bank of Israel Governor Stanley Fischer said Monday that Israel's national economy was more resilient than most in facing the current global economic downturn. And, he believes, it can do even better. 
"An important characteristic of the Israeli economy," Fischer explained, "is its ability to withstand crises."
Addressing a government planning conference, Fisher said that he is often asked why the Israeli economy came through the global economic crisis relatively better than other countries. "I reply that we went into the crisis in a relatively better situation. In addition, we acted with determination to limit the damage to the Israeli economy from the crisis." As a counter-example, Fischer cited what he said was the weakened state of the American economy before the global crisis broke.
Fischer said that the Israeli economy saw impressive growth between 2003 and 2008, with a high point in 2006, despite the Second Lebanon War which was fought that year. "An important characteristic of the Israeli economy," Fischer explained, "is its ability to withstand crises. That was seen, for example, during Prime Minister Ariel Sharon's illness, when Hamas took power in the Palestinian Authority, and other events, during which the economy continued to function well and show impressive growth, despite the situation."
Despite its relative resilience, the Israeli economy was not immune to the global crisis due to its interconnectedness with the global economy, Fischer explained. "In fact, sharp drops in imports and exports were recorded as a result of the crisis. At the same time, imports dropped more sharply than exports, increasing the surplus even further. In effect, the export sector is recovering more quickly than the imports, primarily due to hi-tech exports. This rapid recovery is one of the reasons for the relatively rapid recovery of the Israeli economy as compared with other countries in the world." This is true despite the strengthening of the shekel on world currency markets, which cuts into exporters' profit margins.
The Bank of Israel Governor encapsulated his view of Israel's economy today, saying, "When we look at the macroeconomic indicators we see that the economy is doing well, but there is still much room for improvement." The general economic growth, Fischer cited as an example, has not significantly impacted the unemployment rate in the country. At the same time, he noted, the world is expecting an overall negative annual growth rate, while Israel is expecting its economy to expand by 2.5 percent in 2010.
Governor Fischer gave high marks to the government, as well. Its fiscal responsibility was praiseworthy, especially in light of the behavior of other governments worldwide, he noted. The budgetary debt did not increase, unlike elsewhere in the world, and it is expected to decrease next year.