Macroeconomic Forecast Israel

The outlook for Israeli growth is generally good. We have raised our 2006 growth forecast to 4.5%, only slightly lower than the better-than-expected 5.2% growth seen in 2005. Also on the positive side, we expect growth to become more broadly based in 2006. The recovery, initially driven by export growth, gathered steam in 2005 with a pick-up in private consumption. Now, we expect investment to recover in 2006 after sluggish growth in 2005, while private consumption growth will speed up from its estimated 3.9% in 2005, owing to lower unemployment, better confidence and probably also higher wages. As ever, politics and security present the major risks.

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