Cabinet to discuss effect of global market crisis on Israel

Finance minister, BoI governor to present assessment of global economic situation following S&P downgrade of US credit rating.

Finance Minister Yuval Steinitz 311 (photo credit: Courtesy: Ministry of Finance spokesperson)
Finance Minister Yuval Steinitz 311
(photo credit: Courtesy: Ministry of Finance spokesperson)
Finance Minister Yuval Steinitz and Bank of Israel Gov. Stanley Fischer will present their assessment of the worsening global economy and its affect on Israel at Sunday’s weekly cabinet meeting.
The discussion will take place amid ongoing fears that the United States will suffer a double-dip recession, following Standard & Poor’s unprecedented decision to downgrade the US credit rating and after a week of wild fluctuations in global markets.
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Zev Golan, an analyst at the Jerusalem Institute of Market Studies, told The Jerusalem Post on Thursday that the government should not respond to panic at home and abroad. The best thing to do would be to continue the free market policies such as cutting taxes and not borrowing heavily, that brought the Israeli economy to its current position of strength, he said.
“I would say that economic policy that is slapped together quickly in a frantic response to the people in the streets demanding more and more is not necessarily going to be good policy. Until now, over the past couple of years Israel has weathered the global crises rather well through sound economic policy and leaders who did not panic,” Golan said.
“[Israel was] relatively speaking unaffected by the global crisis. Its unemployment rate is far below that of America’s, its debt to GDP ratio is going better than America’s and the European countries’.”
The ongoing protests over the cost of living “put us on the road to joining the global crisis,” Golan warned. If the government responds to calls to increase expenditure Israel will find itself “in the same sad situation as Europe and the United States.”
Regarding the weak American economy, he said Jerusalem could make a major statement of friendship by telling Washington it no longer requires billions in foreign aid.
“This would be a good time to make a contribution to the United States,” Golan said.
“It will definitely improve Israel’s image, and it would show foresight by doing it willingly on our part rather than having the United States [making the same decision itself] in a few years.”