olmert drinking 88 248.
(photo credit: Israel Manufacturers Association)
Leading industrialists are optimistic that the economy will come out of the crisis at the end of 2010 after painful layoffs of up to 160,000 in the business sector this year.
According to a survey carried out by the Israel Manufacturers Association among 80 leading industrialists, 63 percent of the respondents forecast that the recession would last until the end of next year, 17% said it would be over by the end of this year, 14% said it would end in the middle of 2010, 3% said it would end in the middle of this year and 1% said it would last beyond 2010.
Michael Sarel, an economist at Harel Finance Investment House, said 2009 would be a crisis year for the economy, with slow signs of a recovery in 2010 and modest growth prospects in 2011.
"On the back of an accelerated slowdown in the global economy [narrowing the demand for Israeli exports], sharp falls on the stock market in recent months [cutting public wealth and consumption], the liquidity and credit crisis around the world and in Israel [slowing investments], we are expecting a significant drop in gross domestic product in the first quarter of 2009," he said Sunday. "For 2009 as a whole, we expect the rate of economic growth to be zero, compared with our previous forecast of 1.8% GDP growth three months ago."
Sarel said he expects a recovery in 2010, during which the economy would grow at a rate of 2.2%. In the years 2011 to 2013, the economy would grow at a rate of 3.7%-3.9%, he said.
Sarel said the forecast was based on the assumptions that the US economy will grow 1.6% and the euro zone will grow 0.2%, as forecast by the International Monetary Fund.
In light of the difficult economic situation, 79% of the surveyed manufacturers want the incoming government to raise the expenditure ceiling to 3% from the current 1.7%. Fifty-four percent said the most pressing economic issue facing the new was easing the credit crunch, 11% said its first task should be investment in infrastructure, 8.5% said it was cutting red tape, 6% said incentives for investment needed to be increased and 6% said corporate tax cuts should be speeded up.
In addition, 28% of the respondents estimated that the business sector would lay off between 100,000 to 160,000 workers in 2009, while 24% said the number of layoffs would be between 40,000 and 60,000.
In the last quarter of 2008, the rate of unemployment rose to 6.3% from 6% in the previous quarter, following a continued slowdown in previous quarters.
As a result of the sharp slowdown in economic activity, Sarel said, unemployment would deteriorate to an estimated average rate of 7.4% in 2009 and 7.7% in 2010.