Israel economy up, up and away
Israel economy up, up and awayIsrael news photo

Israel, which weathered the global financial disaster better than most countries, will be one of the leaders in economic growth in 2010, investment analysts say. The value of the shekel is likely to increase.

The gross domestic product (GDP) will soar to 3 percent in 2010, compared with near zero this year, the American-based JP Morgan investment house estimates. Its analysts also think that Israel's growth will jump another 50 percent in 2011, reaching a healthy rate of 4.5 percent, helped by increased consumer purchases and sharp increases in exports and imports.

Most analysts expect that the rate of inflation will continue to rise and reach 3 or 4 percent in the next two years. The Bank of Israel is expected to raise interest rates accordingly, with a quarter of a percent hike anticipated Monday night, when the February rate is to be determined.

Merrill Lynch has forecast a shekel-dollar rate as low as 3.40, slightly above the 12-year low of last year, while JP Morgan estimates it will decline only to around 3.55. Few analysts expect it to rise above four shekels to the dollar. It currently stands just below 3.8. A lower rate might adversely affect exports, leaving companies with fewer shekels for their dollars and Euros that they receive from overseas.

The International Monetary Fund (IMF) has praised Israel for its handling last year’s financial crisis, which caused chaos in the United States and other countries. The IMF recently said that Israel has been achieving a “safe haven status.”

One sign of a more robust economy is November’s 0.4 percent decline in the unemployment rate. The Internet industry is expected to lead the rebound in the high-technology field - although salaries in the field are not rising.