Fischer urges aid as slowdown bites

State-of-the-economy index falls 0.4%, manufacturing drops 3.5%.

Stanley Fischer (photo credit: Ariel Jerozolimski [file])
Stanley Fischer
(photo credit: Ariel Jerozolimski [file])
Bank of Israel Governor Stanley Fischer has urgently called for the swift implementation of the government's financial aid package as the index of leading economic indicators and weak manufacturing data point to a deepening slowdown in recent months. The composite state-of-the-economy index for November released by the Bank of Israel on Thursday declined 0.4 percent. "The decline in the index over recent months is a sign of the continued slowdown in the economy, which began in the second quarter of the year," said central bank economists. The November index was influenced by a drop in the index of trade and services revenue, which fell 2.1% in October, after a rise of 1.4% in September. The index of goods exports rose 4.6% in November, after a drop of 5.6% in October. In addition, the manufacturing-production index gained 1.9% in October, after plunging 6.5% the previous month. However, figures released by the Central Bureau of Statistics on Thursday showed that over the three-month period of August to October the manufacturing-production index fell 3.5% in annual terms. Not including hi-tech, the manufacturing index declined 6.9%. The slowdown in manufacturing production during the period was led by a 10.4% decline in hi-tech and a 13.4% fall in the mixed-traditional technology manufacturing sector. In addition, the number of salaried positions in the industry dropped 1.1% in the three-month period. Speaking at the annual conference of the National Security Research Institute on Wednesday evening, Fischer warned that unless economic and financial measures are implemented with immediate effect, Israel's economic achievements of recent years would be wiped out. "Israel's relatively good position at the beginning of the crisis was due to its responsible fiscal and monetary policy, low exposure to foreign exchange market, a surplus in the balance of payments and relatively high foreign currency reserves," he said. "However, now three months after the outbreak of the global financial crisis, the challenges faced by policy makers have very much grown." Fischer expressed frustration over the delay in instituting a stimulus package to help the economy cope with the global crisis. "Unfortunately, it took us, the State of Israel, about three months since the outbreak of the global financial crisis until a package of measures was consolidated and approved," he said. "Still, these measures have not been implemented until now. Precious time is being wasted that could have been used to help the economy. In particular, the implementation of the financial measures must be advanced swiftly."