Israeli Economy Continues to Strengthen

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JERUSALEM, Israel - Israeli Finance Minister Yuval Steinitz expressed cautious optimism when he addressed the Knesset Finance Committee this week.

"We are in the process of exiting the [economic] crisis," Steinitz said, "and in the middle of the climbing, but the way is still long and requires caution."

Steinitz said exports, which make up some 45 percent of Israel's GDP (gross domestic product) are on the upswing, along with the overall economy, which rose by 0.8 percent in the second quarter.

"We have started the climb upward and have recovered about half of the drop in exports," Steinitz said. "I hope that in 2010, we will complete that recovery."

At a conference in Tel Aviv on Thursday, NYU economist Nouriel Roubini, dubbed "Dr. Doom" by some for forecasting the global financial crisis, said the Israeli economy is fundamentally sound.

"The economy is recovering, but there are two caveats to robust growth: Japan, the U.S. and Europe are still sluggish, and they are Israel's main importers," Roubini said.

The NYU professor is less optimistic about recovery overall, due in part to the weakened U.S. dollar.

Roubini praised Bank of Israel Governor Stanley Fischer, who estimated a 2.1 percent annualized increase in the third quarter.

"The Bank of Israel has acted to shore up the economy through very sound monetary policy," Roubini said.

During the height of the crisis, Fischer dropped the interest rate to 0.05 percent - the lowest in the nation's history. In August, when the economy began to show signs of recovery, he raised the rate to 0.75 percent.

Meanwhile, the Tourism Ministry reported the first increase in its sector since the beginning of the year.

In October, 330,000 tourists visited the country, a 9 percent increase over the same month last year.

"The change in the negative trend since the beginning of the year can be attributed to the marketing and focus on Israel as the Holy Land, with Jerusalem as its center, and the marketing efforts to bring target communities to Israel," Tourism Minister Stas Meseznikov said on Thursday.

"Our aim is to bring an additional 3 million tourists within three years," he said.

Meseznikov, who traveled to Brazil with President Shimon Peres, signed a tourism agreement on Thursday with his Brazilian counterpart, to increase the numbers of South American visitors to Israel.

The Israeli delegation also announced closure of a $350 million sale of drones (unmanned aerial vehicles) to Brazil.

The Heron 1 drone, manufactured by the Israeli Aerospace Industries, will be used for security surveillance and fighting crime. The government also plans to use the drones when it hosts the 2016 Olympic Games.

Sources: The Jerusalem Post, YNet news

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