Jerusalem, Feb. 14 – The International Monetary Fund found that Israel’s fiscal strategies helped it avoid the global crisis, and its economy is strong while major economies around the world are struggling with recession, debt and unemployment.
The IMF’s annual inspection of Israel’s national accounts concluded that “Israel's economy remains strong,” and gave the government and central Bank of Israel some gold stars for key economic policies. Not only had Israel weathered the global economic crisis well, but Israel’s economy continues to grow at acceptable rates while inflation is down and unemployment is at its lowest level ever.
The news came as major financial services companies Moody’s and Standard & Poor’s both cut their credit ratings of several more western countries this week and warned that others might lose their top triple-A ratings amid Europe’s growing debt crisis.
“Policies have responded well to the immediate challenges,” the IMF said, saying the good news also means that a severe economic downturn in 2012 is unlikely in Israel and growth should return to 3.75 percent in 2013 led by exports. If Israel can keep public debt on a downward track it “will maintain confidence in Israel despite strained international markets.”
The IMF report wasn’t all rosy, with the inspectors calling on Israel to take steps to further reduce the deficit, lower housing prices and boost employment in the Arab and Haredi (Jewish ultra-orthodox) sectors – both of which have become the main focus of poverty in Israeli society. The IMF noted the need for some spending increases, notably in education and public investment.
Israel’s economy was “led by strong exports and consumption, with investment rising more recently,” the report said, noting that “in part, this reflects Israel's strong policy frameworks.”
The report said the government and the central Bank of Israel have taken actions that “have helped to underpin continued investor confidence in the Israeli sovereign in a difficult global environment.”
"The annual visit with IMF economists in Israel is highly important for Israel's economic decision makers and the economy,” said central bank governor Stanley Fischer. “The members of the mission are experienced, professional economists, and every year we derive great benefit from the report they compile.”