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Four leading economists believe Israel's economy is far from being in a recession - and is fundamentally in better shape than those of most developed nations.

The four, who come from different fields and backgrounds, say that while there may be some backsliding in the first half of the year from gains in 2011, the economy is still on course for growth, especially when compared to what is happening in the United States and Europe.

That said, Israel's economy is plagued by a host of ills and an unhealthy dose of uncertainty. Causes of the latter include external economic factors (mainly the continuing economic crises in Europe and the United States ), internal economic and security factors (the Iranian nuclear threat and all its implications, for starters ), and internal political factors (such as the possibility of early elections ).

The quartet all agree on Israel's comparatively good shape, but they also point out the weak spots - starting with exports, which grew by just 4.9% for the year as a whole in 2011 and, worryingly, by less than that in the year's final quarter. With nearly half of Israel's total product aimed for export, that figure should have us losing sleep at night.

But the export picture is complex. While exports to the United States took a big hit in 2011, exports to Europe increased in the second half of the year, confounding all expectations.

All the experts anticipate sluggish growth in 2012, with its knock-on effects of lower tax revenues and, in turn, less implementation of social-welfare reform and reduced ability to meet military budget demands.

Going back to Israel's half-full cup, economically speaking, inflation is low, the banking system is stable and with unemployment at 5.6% for 2011 the labor situation overall is in very good shape.

Really rosy, mostly

Eldad Shidlovsky, head of the Finance Ministry's economics and research department, explicitly said that "Israel is far from recession" and that he believes the treasury's 3.2% growth forecast for 2012 is cautious. He pointed out that, while it is below Israel's growth rate for the past several years, "it is good, especially when compared to European states."

Shidlovsky's optimism also extended to Europe and the United States, which he believes will climb out of their economic morass.

"Things are starting to work out in Greece. Negative growth of 0.7% is forecast for Europe in 2012, but the Continent is beginning to stabilize and the problems are starting to work out," he said. Shidlovsky went on to tick off the trillion-dollar injection of cheap loans from the European Central Bank, which greatly calmed fears of a euro-zone implosion, as well as promising growth and employment figures in the United States.

"The 2012 growth outlook for the United States is 2%, but it's still not clear - assuming that President Barack Obama is reelected - whether the disagreements between him and the Republicans, which are harming the American economy will be solved," Shidlovsky said.

The doomsayer

Prof. Avi Ben-Bassat is deeply worried. Ben-Bassat, a former Finance Ministry director general who is on the faculties of the Hebrew University of Jerusalem, the Israel Democracy Institute, and the Israeli Center for Academic Studies, said all of the 2012 forecasts ignore several risk factors. If even a few of them come into play, he said, Israel will be deeply affected.

Topping Ben-Bassat's threat list, of course, is Iran. "We are living in an extraordinary time of multiple threats - more than at any time in the past, and these dangers were not factored into the economic forecasts," he said.

"Any one of these risks, if realized, will push us into a more pessimistic scenario," Ben-Bassat said. "On the other hand, if they do not occur, 2013 will be a better year than 2012."

Expanding on the implications of the Iranian situation for Israel, Ben-Bassat said that even if fears of military action are not borne out, huge sums will be allocated to defense, affecting the government's ability to direct money into social-welfare issues. And if the fears are realized, in addition to the heavy military and human cost, there will be significant economic damage. Israel's economy could be paralyzed, and foreign investments in the country will decline, he believes. "The economic forecasts for 2012 didn't take this type of event into account," Ben-Bassat said.

The state's ballooning budget deficit

Yehuda Nasradishi, until recently the head of the Israel Tax Authority, also came down on the glass-half-empty side in his outlook for 2012. As befits someone with his employment history, Nasradishi focused on the tax picture. The state budget for 2012, he noted, assumed a growth rate of 4% in 2012. But if the treasury's updated forecast of 3.2% is accurate, there simply won't be enough money in the kitty to meet allocation levels. About a month ago Finance Minister Yuval Steinitz warned the Knesset Finance Committee of an anticipated NIS 11.3 billion budget shortfall, based on the downshift in the growth forecast.

That will balloon the budget deficit to NIS 30 billion, compared to the NIS 18 billion target - "which will greatly weigh on the budget this year, on the expense side," Nasradishi said.

Expect higher taxes on gasoline and alcohol

"Maybe I'm overly optimistic," said Leader Capital Markets analyst Yonatan Katz, "but when I look at the entirety of the figures I see the beginnings of improvement toward the end of the second quarter of 2012." Katz admitted, however, that the data are not conclusive. He said he expects growth of 3% for the year, an economic upturn in Europe and the United States and, to offset any loss in other tax revenues, higher taxes on gasoline and alcohol.