Macroeconomic Forecast Israel

Israel is set to enjoy 4.0% real growth in 2006, after expanding by an estimated 5.1% in 2005. Growth is becoming more broadly based, driven by higher private consumption as well as by exports. Lower unemployment, better consumer confidence and ongoing tax cuts mean private consumption is expected to grow by some 4.0% in 2006. While the 2006 elections pose some risk to macroeconomic policy, we believe that budgets will continue to target a 3%-of-GDP deficit. In 2007, we expect growth to slow further to 3.6%

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