BOI: Terrorism having 'moderate' effect on economy

errorism typically affects the economy in two ways: it drags down tourism, and keeps people from going out and spending money.

December 7, 2015 20:58
1 minute read.
Illustrative: Palestinian stone-thrower

A Palestinian stone-thrower looks on as he stands in front of a fire during clashes with IDF troops in the West Bank village of Duma. (photo credit: REUTERS)


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The spate of stabbings and car rammings that have dominated the headlines in recent months is having a “moderate” effect on the economy, according to the Bank of Israel.

In the detailed report from its December interest rate decision, which was made public Monday, the bank found that “the effect of the wave of violence on economic activity is only moderate: The number of tourist arrivals in October was five percent lower than the seasonally adjusted average over the first nine months of the year.”

Terrorism typically affects the economy in two ways: it drags down tourism, and keeps people from going out and spending money.

BOi noted that there were mixed signals on the consumer side: In October, Bank Hapoalim’s Consumer Confidence Index declined moderately, while the Bureau of Central Statistic’s version showed a sharper decline.

All in all, the report showed, the economy was chugging along at the moderate pace that has become its new normal.

The slowdown in global trade and economic growth would likely continue to affect Israeli exports, even as the shekel remained stable.

The local labor market remained strong, with low unemployment and a high level of the population participating in the labor force. Israel’s inflation remained below the target. Most forecasters anticipated the interest rate remaining stable at 0.1% until late next year.

Looking toward the expected interest rate hike from the US Federal Reserve next week, which will be the first since the global financial crisis began, and the continued easing from the European Central Bank, BOI simply noted that “at this stage it is difficult to assess the effect of these opposing processes on Israeli markets.”

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