Business optimistic for more economic growth in Q1

According to the Bank of Israel's survey of 600 companies and businesses in a variety of sectors, all sectors in the economy, except the construction industry, grew during the last quarter of 2005.

By SHARON WROBEL
January 30, 2006 07:28
2 minute read.
inflation arrow up 88

inflation arrow up 88. (photo credit: )

 
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Following an encouraging survey, Israeli companies and businesses expressed optimism for continued economic growth in the first three months of 2006, putting off concerns that political uncertainty could depress growth. According to the Bank of Israel's survey of 600 companies and businesses in a variety of sectors, all sectors in the economy, except the construction industry, grew during the last quarter of 2005. The general rise in total economic activity in the fourth quarter came, primarily, as a result of an increase in exports but also through activity in the local market. The positive trend was expected to continue into the first quarter of this year, according to the surveyed companies. "The surveyed companies did not see any restrictions to carry out their planned business activities in terms of both the demand and supply side," said the quarterly report, which uses qualitative measures to estimate economic activity. Following declines in the two previous quarters, the construction industry reported stable activity for the sector as a whole in the fourth quarter, but the findings of the report still pointed to declines primarily in the building of infrastructure. The sector painted a divided picture. Large construction companies saw a rise in activity in the last three months of 2005, which was expected to expand into the first quarter of 2006. Small and medium-sized construction companies, on the other hand, reported a continued decline in activity at the end of 2005 and a moderate downturn in the first quarter of this year. Within other sectors, industrial companies were confident about continued strong growth, in particular in export sales orders. For this quarter, the sector expected increased export sales growth alongside levelled domestic sales orders. Other sectors that stood out in the survey were hotels and tourism companies, which had seen a sharp rise in activity during the first three quarters of 2005 and continued their upward trend in the fourth quarter. This was expected to spill over into the first three months of this year, supported by the renewed confidence in foreign travelers to Israel and the rising demand from domestic travelers. The bank further reported that expectations amongst companies were that the shekel/dollar rate would reach NIS 4.76 over the next 12 months, a change to the outlook of NIS 4.73 in the third quarter. The companies' average provision for inflation for the 12 months to December 2006 remained stable at 2.6 percent, unchanged from the previous quarter's forecast.

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