Macroeconomic Forecast Israel

BMI View: We have increased our 2005 growth forecast to 3.7% owing to two factors: better-than-expected Q2 data, which show real growth of 4.8% in the April-June period, and the relative lack of political disruption surrounding the Gaza withdrawal. The departure of finance minister Benjamin Netanyahu poses some risk to fiscal policy, but we are holding our budget forecasts constant for now, assuming that his successor (yet to be appointed, though Vice-President Ehud Olmert is temporarily acting in his stead) will not make major changes. However, there is some risk that spending will increase as the 2006 elections approach, especially

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