Israeli GDP could contract 0.9% if eurozone breaks up
Data presented at a conference of top economic and finance officials on the local implications of the world economic crisis.
If the eurozone breaks up next year, the Israeli economy could be expected to contract by 0.9%, according to data presented Tuesday at a conference of top economic and finance officials on the local implications of the world economic crisis.
"The main conclusion from today's discussions is that in order to be better prepared for the economic crisis in Europe we must strictly observe fiscal discipline, protect the credibility of the government and the treasury, and comply with spending restrictions and the budget deficit target," Finance Ministry director general Doron Cohen said, summing up the gathering at Kibbutz Ma'aleh Hahamisha.
Cohen organized the conference, whose attendees included Bank of Israel Deputy Governor Karnit Flug, National Economic Council Eugene Kandel and Israel Securities Authority chairman Shmuel Hauser. Participants heard about two separate scenarios for the troubled eurozone. In the first, more likely scenario, Greece leaves the European currency bloc in an organized manner, as a result of which Israel's economic growth in 2013 reaches 1.7% rather than the currently projected rate of 3.3%. In the worst-case scenario, the eurozone breaks up completely, and as a result the Israeli economy goes into negative growth, contracting by 0.9%.
"The discussions addressed unemployment, growth, hiring and what must be done in technology and other sectors," Cohen said, adding, "It's important that at the end of the crisis we improve our situation in comparison to the situation on the eve of the crisis. If the high-tech industry is hurt, the state must think about how it prepares for the intermediate period in order not to lose the sector's position as a leader of growth."