'The party has not started yet'

We're doing OK, but global markets can still be a whammy, says Treasury D-G.

Ariav 224.88 (photo credit: Ariel Jerozolimski [file])
Ariav 224.88
(photo credit: Ariel Jerozolimski [file])
Despite positive indicators in the local economy over recent months, there is still a high level of uncertainty overshadowing global markets, Treasury Director-General Yarom Ariav said Monday. "Over the last few months we are receiving an array of positive indicators in the economy, pointing to a change in direction and an emergence out of the crisis," he said at the Finance Ministry's Capital Market Conference in Tel Aviv. "But it is not more than a concentration of positive numbers. "Despite the positive numbers, it must be understood that the party has not started yet because of the economic situation around the world. Although governments' rescue packages have been instituted around the world, we are still in a situation of great uncertainty." Ariav said the world had not yet dealt with the fundamentals that triggered the global crisis. "There is a difference between stopping the bleeding and restoring confidence in the financial system, which have been taken by governments in the past year, and the means for dealing with the fundamentals that caused the great crisis," he said. "The world has not yet dealt with the fundamentals. "We haven't yet dealt with the imbalance between lending countries and indebted countries, between the heavy consumption in the US versus the savings in China. There's an imbalance, which is very worrying. Consumption in the US has switched from private to public." Regarding the local economy, Ariav said there had been minimal growth in GDP, exports, the Consumer Price Index, tax collection and an increase in the number of job seekers. "Being an export-oriented country, we will be affected by the level of uncertainty on world markets," he said. "Anyone who thinks that the worst is behind us should know that it isn't that simple. "Things will not be boring here. There is a chance that the same growth we are seeing in recent months is fragile and not sustainable, and therefore we need to create security buffers for the future." Ariav commended the local business sector for for how it has dealt with the global crisis. "We have developed better tools and means to deal with the crisis than our competitors around the world," he said. "We have an advantage to deal with crises: We act fast and have a business sector that knows how to prepare for the worst and how to identify opportunities." Ariav said the Israeli banking sector had remained intact. Even the nonbanking sector had managed to cope relatively well, he said, but there is still room for questioning and reviewing the stability of the financial system. "We are not immune to future crises," Ariav said. "More work needs to be done in terms of closer cooperation with all financial regulators including the Bank of Israel to secure the stability of the financial system. There is not enough exchange of information. I don't feel that the Bank of Israel is aware of this issue and the threat to the stability of the system." Separately, the Industry, Trade and Labor Ministry on Monday published preliminary data indicating that the situation in the labor market and the demand for workers had stabilized and improved in the third quarter of the year. A preliminary analysis of third-quarter figures showed that the average number of job positions per day increased by 6,500, or 40 percent, to 27,800 in the third quarter, up from 21,400 in the second quarter. Despite the improvement, the number of available jobs was still 37% lower than in the corresponding quarter of 2008. The preliminary data is based on employer surveys carried out during July and August in the business sector. Benny Pfefferman, head of the Industry, Trade and Labor Ministry's research and economics division, said despite positive signs among some labor market variables, the number of available jobs was still low compared with the strong growth years of 2004-2008. "We expect the rate of unemployment to continue to rise in the coming quarter but at a much slower pace than in previous quarters," he said.