Israeli CEOs split over recovery by year's end, survey finds

The logo on the headquarters of the Union Bank of  (photo credit: ap)
The logo on the headquarters of the Union Bank of
(photo credit: ap)
Business managers in Israel are less optimisticabout the possibility of a recovery of the economy by the end of thisyear, according to the Ziegelman Institute Index for the state of theIsraeli economy.
"The index suggests that business managers in theeconomy believe that there will no other choice but for the governmentand the Bank of Israel to continue to act in support of a weakening ofthe shekel against the dollar in an effort to minimize further damageof industrial exports, which have already been hurt by the globaleconomic crisis," said Ehud Ziegelman, head of research at theZiegelman Institute for Business Consultancy and Marketing Research.
The index, which is based on a survey among a representativesample of over 200 executive managers, showed that 46 percent don'texpect the economy to emerge out of the recession by the end of thisyear, while only 42% see the start of a recovery by the end of thisyear.
Only 14% of the surveyed managers expect growth in the numberof employees while 12% expect a reduction the work force and 74% saidthey expect no change in the number of workers.
Sector by sector analysis showed that 17% of thesurveyed managers in the manufacturing sector plan to increase thenumber of employees compared with 16% in the services sector and 3% inthe public sector.
Meanwhile, UBS Investment House on Thursday raised optimismregarding a relatively early recovery of Israeli economic activityalready in the third quarter of this year.
"We remain more constructive regarding arelatively early recovery in Israeli economic activity than many otherobservers - above all the Bank of Israel - which still seems ratherconcerned about growth prospects," said Reinhard Cluse, economist atUBS Investment House.
"Following a moderate rise in April and May, our composite leadeconomic indicator (LEI) for Israel showed a strong rise in June lasttime seen in June 2007. Given our lead indicator's three-month leadtime vis-à-vis industrial production, the new data point strengthensour conviction that economic activity will show clearer signs of apickup over the course of the third quarter of 2009."
Last month, UBS launched the proprietary composite leadeconomic indicators (LEIs) for seven emerging markets countries,including Israel. The composite lead economic indicator is based on sixvariables including the manufacturing Purchasing Managers Index (PMI),intermediate goods imports, the Tel Aviv 100 Index, and the Bank ofIsrael quarterly state of the economy indicator.
UBS expects the economy to contract by 0.8 percent in 2009before returning to strong positive growth of 2.7% in 2010 which isabove-consensus growth forecasts of -1.2% and positive growth of 1.6%respectively. The Bank of Israel forecast for the economy to contractby 1.5% this year and grow at rate of 1% in 2010.
"Compared with many of its emerging markets peers, the Israelieconomy suffers from relatively few structural problems," said Cluse."This implies that, once the global economy [and the US economy, inparticular] recovers in a more sustained manner, the Israeli economyshould be able to pick up steam again relatively quickly."

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