Fischer: Economy strong through crisis

Fischer gave his assurances that the mechanisms were in place to guarantee the economy would continue to grow despite the security situation.

By AVI KRAWITZ
July 26, 2006 07:42
2 minute read.
stanley fischer 298.88

stanley fischer 298.88. (photo credit: Ariel Jerozolimski)

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later

The government will reach its deficit targets for the year despite uncertainty over what the ultimate toll on the economy the conflict in the North will take, a confident Bank of Israel Governor Stanley Fischer told members of the United Jewish Communities Solidarity Mission. "Our government budget ended last year with a deficit of less than 2 percent and we were on target to have a deficit of between 0 and 1% this year," Fischer told the gathering late Monday evening. "The official target, however, is 2% and we will make that safely, even with the war expenses that we are likely to face." Fischer gave his assurances that the mechanisms were in place to guarantee the economy would continue to grow despite the security situation. Just prior to Fischer's address, the central bank raised the key interest rate from being in line with the US rate of 5.25% to 5.5%, which he explained was a way of maintaining the high level of confidence in the economy. "[We raised the rate] so that people should understand we have no intention of letting the financial situation in Israel get out of hand, or of letting current events have an impact on inflation or on confidence in this economy," he said. In expounding on the cost of the war on the economy, Fischer stressed that it depended on the length of time it takes to complete. In the short-term, if it ends in a week or two, the major impact would be in the North, he said, adding that much depended on the political outcome - that there would be a reduction in the threat that is facing Israel. Nevertheless, in such a short-term scenario, he estimated the financial cost to the country would be somewhere just less than 1% of gross domestic product. "Not a small amount," he added "but the record shows that these recoveries happen very quickly provided it's short and provided investor confidence hasn't been shaken." An extended operation, however, naturally would have a more serious effect on the economy but prior arrangements are in place to keep certain parts of the economy focused, Fischer said. The main danger to the economy, he stressed, would be the loss of tourists, "which would affect output as it did during the Intifada." For the UJC delegation, which arrived in the country Sunday to explore what their communities can do to help the situation, Fischer had a clear message. "We will have to spread the word to return investments in the North and here you can help by talking about the benefits of investing there," he said. "Charity is no doubt going to be helpful - the government is going to need to provide systematic aid to the small-to- medium size enterprises, but investment is very important." "Foreign investors need to know that this economy keeps working despite the violence, that people are aware of the needs and are doing everything they can to keep the economy going," he said.

Join Jerusalem Post Premium Plus now for just $5 and upgrade your experience with an ads-free website and exclusive content. Click here>>

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection

By GLOBES, NIV ELIS