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Treasury to trim 2009 growth forecast By Eytan Avriel Tags: Israel, Finance Ministry The Finance Ministry is expected to adjust downward its 2009 growth forecast for the Israeli economy in the next few weeks, from 3.5% to between 2.5% and 3%. The treasury's current forecast is among the highest issued by the country's financial bodies. The Bank of Israel is talking about 3.1% growth in 2009, and economists at Israeli banks and investment houses are also looking at economic growth of below 3.5%. No official decision has been made, however, and according to a statement from the treasury: "There are currently no intentions toward or thoughts about changing the the growth target or any other target for 2009." Advertisement There are significant implications for the treasury's growth forecast. It serves as the basis for the state budget and directly affects the state's revenue forecasts. A reduction in the growth forecast would entail a decline in tax revenue forecasts. That, in turn, means a rise in the budget deficit, unless the budget is cut accordingly. Observers believe that the Finance Ministry will issue its revised figures for growth and tax revenues before the budget goes to the Knesset and the Knesset Finance Committee. The economic slowdown has a number of causes, including the global recession, the weakening of the dollar against the shekel, the credit crunch and the reduction in financial activity. The slowdown is expressed in a decline in tax revenues and in the purchase of big-ticket items such as new cars, as well as a dip in other business sectors. Most of the decline in tax revenues is caused by a decrease in profits by self-employed individuals and companies alike. Taxes from salaried workers overall have risen due to the increase in employment rates. Finance Minister Roni Bar-On and treasury officials, say the ministry-watchers, are aware that they may be aiming too high and are sensitive to the embarrassment they would suffer if the economy performs significantly worse than their optimistic expectations. The treasury may be recalling what happened when former finance minister Silvan Shalom dished out too rosy a growth forecast when he presented the annual state budget draft and was forced to make painful cuts to the budget two months later as a result. Bookmark to del.icio.us   But you cannot hide Court rules Michigan resident helped liquidate Polish Jews during Holocaust. Junk TV Airing of first Palestinian soap opera was cancelled because topics were 'too liberal'.

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