No Effect on Israel, Unless Oil Prices Rise

The Dubai crisis is not expected to affect the Israeli economy, said senior economic officials here who requested anonymity. Economic ties between the two countries are extremely limited, they added.

How Dubai's financial crisis will affect world markets is a different story, but the officials forecast no major fallout here as well. After the shock of the first bits of bad news, it became clear that Dubai's woes were only local with limited global implications, they said.

The crisis will hardly affect Israeli exports and imports, or other sectors. The dollar, which rose on the news, will return to its previous levels in a few days in Israel and around the world, the officials said.

An open question is whether the crisis will move oil prices, the only change that would hit Israel. Interest rates should also not be affected in the near term, especially after Bank of Israel Governor Stanley Fischer announced a 0.25% rate hike for December last Monday.

Finance Minister Yuval Steinitz told Channel 2's "Meet the Press" yesterday that he also forecasts only minor effects, if any, on the Israeli economy from the Dubai crisis. Steinitz said this was further proof of the strength of the local economy, which has weathered the world financial crisis better than most countries.