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The Bank of Israel yesterday updated its economic growth forecasts for the second time in a month. It cut its 2008 growth forecast from 4.7% to 4.3%, and chopped almost in half its estimate for next year from 2.7% to only 1.5%.

Only two days ago Finance Ministry director general Yarom Ariav estimated 2009 economic growth at about 2%. The Israeli economy grew 5.3% in 2007.

The update follows the International Monetary Fund's lowering of its forecasts for 2009.

The central bank predicts that unemployment will reach 7% next year, up from 6.1% this year. In 2007 the jobless rate hit 7.3%. The bank predicts that unemployment may even rise above 7% by the end of next year.

The central bank also predicts lower growth in a raft of economic parameters for 2009: exports, imports, industrial production, private consumption and consumer spending.

In addition, the budget deficit will rise, from zero in 2007 to 1.6% this year and 2.7% next year.

However, the Bank of Israel expects Israeli economic growth to be higher than in other developed nations.