Israeli businesses are optimistic, predicting that the shekel-dollar exchange rate will reverse its trend and find itself at NIS 4.25 at the end of June and 4.38 by the end of March 2008, according to the Bank of Israel companies survey for the first quarter of 2007.
The average inflation rate projected by the 430 surveyed businesses for the 12 months through March 2008 was 1.8 percent, down from the 2% predicted in the previous survey. Only 4% of the companies participating in the survey predicted that inflation would exceed the 1-3% inflation target of the central bank.
"Economic activity continued to grow at a slightly slower pace than the preceding quarter, though faster than the slow rate of growth in the third quarter of last year following the Second Lebanon War," the Bank of Israel quarterly report released Sunday stated. "The rise in economic activity encompassed the manufacturing, construction, overland transport, communications and trade and service industries, while the hotel industry continued to report a moderation in activity, registering sharp falls compared to the parallel quarter of last year."
Sector-by-sector analysis showed continued large growth in manufacturing output boosted by higher exports and domestic sales, mainly in the traditional and mixed-technology industries, and to a lesser extent in the hi-tech companies.
Construction companies also reported increased activity in both infrastructure construction and building construction.
"Building starts to show a rise for the first time after a lengthy period," the report stated.
The transport and communications industry benefited from an increase in sales in services to foreigners following stagnation in the previous quarter against a background of falling activity in incoming tourism.
As the only decliner for the period, the hotels and tourism companies continued to suffer from the aftermath of the Second Lebanon War, reporting sharp declines in activity as a result of the relatively low number of bed nights of foreign tourists and Israelis.
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