The Bank of Israel Governor, David Klein, said that the Central Bank
is changing its economic forecast to a more optimistic one. According
to the new forecast, Israel's gross national product (GNP) will rise
by 2.4%, while the business sector's output will increase by 3.7%. In
2003, the GNP rose by 1.2% and the business output by 1.5%.
The Central Bank supports its new forecast with a 2.8% rise in
private consumption and an increase of 2% in fixed asset investments.
This year's positive data comes after three years of decline in
investments and a 5.5% rise in exports, similar to the increase in
exports forecasted for this year.
Kermit Plug, head of Research at the Bank of Israel, says that
"updated data regarding an increase in global trade, combined with
data showing signs of recovery in the second half of the fiscal year,
have raised the 2004 forecast starting point as well as the 2003
expected growth results".
Dr. Klein also supports the government's deficit goal, set at 4% in
2004. Assuming a 2.4% growth rate, the Central Bank expects the
deficit to be slightly higher than 4% of the GNP.