Steinitz: Economy to grow 3.2% in 2012
Finance minister concludes 2011 at Knesset's Finance Committee, says credit crunch scenario looms over economic development
"We experienced a relatively high growth rate of 4.8% in 2011," he said. "Such growth in times of financial crises is no mean feat. This was the second year in a row that Israel grew at a faster rate than all developed countries. The growth stems from an impressive increase in investments," he said.
The minister also presented an updated forecast for 2012: "It's extremely difficult to forecast economic growth in the wake of the turmoil in Europe. The updated forecast is 3.2% instead of 4%."
He also admitted that there were differences of opinion at the Ministry of Finance. Regarding the deficit as a portion of the GDP, the minister said that "instead of 2%, it's expected to be 3.4%; revenue from taxes are expected to amount to NIS 221 billion ($58 billion) rather than NIS 232 billion ($60 billion).
"That said, the objective is to grow as much as possible and it is in our hands to a great extent. If we do the right thing, assuming the eurozone doesn't break up, we believe this is the forecast and we'll do everything to beat it."
Steinitz went on to speak of Israel's economic challenges: "The collapse of the eurozone is an external threat. Internally, the Israeli and international business community feel like they're being ganged up on, which makes many of them hesitant to invest here.
"It’s enough that 10% of tycoons or company owners, who were considering expanding their business, decide to put off their investments."
Furthermore, Steinitz cautioned: "A credit crunch scenario which might make it difficult to raise money for business development looms over the future of our economic development."
Ministry of Finance Director-General, Doron Cohen stressed that "exports did not grow during the year. This offsets the growth and is a cause of future concern.
"We must remember that right now, Europe is talking about a negative growth of 0.5%. This affects the US and Israel as well. This is the main threat we should bear in mind."
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