The International Monetary Fund (IMF) released its preliminary report on Israel’s economy on Wednesday, noting that the country’s economy is “performing well” and that the economic outlook is positive.
IMF division chief Bas Bakker presented the findings to Israeli Minister of Finance Moshe Kahlon and the Bank of Israel governor Karnit Flug. The findings confirmed that Israel’s GDP is growing and “has not had the sharp post-crisis slowdown that many other countries have experienced.” The report noted that the rate of Israelis participating in the workforce has increased from 59% in 2007 to 68% today.
While the IMF commended Israel for its great economic accomplishments, the report also pointed out several economic challenges, include a fiscal deficit that “remains stubbornly high” and ongoing issues in the housing sector. The financial newspaper Globes reported that the Bank of Israel has “called for government spending cuts in order to reduce the fiscal deficit.”
The IMF report also confirmed that inflation is “well below the Bank of Israel’s target.” Echoing the statements of Israeli politicians in the recent election campaign, the IMF recognized that “boosting the supply of housing is critical to contain housing price increases.” Additionally, the IMF observed that Israel has “too much regulation and restriction,” which was consistent with Kahlon’s election promise to call for cutting the red tape that is hobbling the construction industry.
Kahlon’s new Kulanu Party gained ten seats in the Knesset, based in part on Kahlon’s popularity for having deregulated the mobile phone industry, leading to significantly lower rates. The new finance minister is looking to rein in housing costs. Reducing the bureaucratic obstacles to building could be one way to accelerate construction.
The IMF is expected to publish its final report on the Israeli economy for 2015 within two months.
[Photo: Elvert Barnes / Flickr ]