Dar voiced optimism that "an improvement in one or more of these
factors will lead to a real improvement in the Israeli economy." In
Dar's view, the business cycle turned upward during the second
quarter of 2000. If not for the mainly external factors which
hampered tourism and the building industry in the last quarter of
2000, the economy would have grown by a handsome rate of about 5
percent in 2001, Dar said. This year will be a period of transition,
with economic growth of about 2 to 3 percent, but an upswing will
kick in sometime in 2002, she predicted. This is especially likely
if the American economy makes a quick recovery, she said.
The treasury official makes a distinction between high-tech firms and
startups. High-tech companies, she explained, are already an integral
part of the economy, contributing about 18 percent of growth in 2000.
Startups, on the other hand, are another story, according to Dar. She
expects fewer startup ventures to be launched this year, especially
in light of the Nasdaq crisis, but does not foresee a drastic
reduction in this area. Dar noted that the 6 percent economic growth
in 2000 was not due to startup successes alone. Without factoring-in
startups, the economy still grew by 4 percent, double the 1999 rate.
Startup firms have less impact on employment figures, according to
Dar, who said that even if hundreds of engineers and technicians lose
their jobs in startups this year, they should have little problem
finding new jobs.
The steep decline in economic growth during the last quarter of 2000
was a temporary phenomenon, Dar said, noting that the economy is
slowly starting to work its way upward.
However, exports of industrial goods, for January and February had
not shown any signs of rebounding. The Central Bureau of Statistics
reported that they fell by 2.5% since the beginning of 2001.
The Bank of Israel report caused a flurry of comments from various
Government and industry sources. "Foreign investors have not lost
their interest in Israel and are not at all concerned about security
issues," Ms.Vered Dar, deputy director of the Economics and State
Revenues Division at the Finance Ministry, was quoted in a published
interview. Dar suggested that what worries the foreign investor is
the state budget and the possibility of changes in taxation. She
attributed the slowdown in Israel's economy in the fourth quarter of
2000 mainly to external reasons. These included the world economic
crisis and especially the American economy, the Nasdaq declines, and
the Intifada. She also cited Israel's internal political crisis and
instability.