Treasury to Tell Ministers: The Only Way to Go Is Up

Steinitz to announce Israel's economy is past the worst and growth and tax revenues are set to rise.

Israel's economy is past the worst of the 2008-2009 global crisis and growth and tax revenues are set to rise, with recovery accelerating from 2010, Finance Minister Yuval Steinitz and Finance Ministry Director General Yarom Ariav are expected to announce at this morning's weekly cabinet meeting.

Steinitz is also expected to tell his cabinet colleagues that growth for this year and next will beat the treasury's previous annual growth forecasts of 1% and 1.5%, respectively. (Reverse the figures, or the years, to see the Bank of Israel's forecasts.) He'll add that the state budget deficit for 2009 and 2010 will fall significantly below the gloomy expectations of 5.5% and 6%, respectively.

Top treasury officials are slated to begin today what is envisioned as a new tradition of providing the cabinet with a detailed quarterly update on the state of the Israeli economy. Steinitz and Ariav will say that, because of its relative resilience, the local economy didn't fall as far (and for as long) as other world economies, but they'll also sound a cautionary note and warn of the challenges ahead.

Ariav is to show a presentation demonstrating - with pretty colored charts, we assume - how Israel flipped from negative growth of 3.2% in the first quarter of the year to positive growth of 1% in the second quarter, as compared to -6.4% and -1% in the United States, -9.7% and 0.4% in the Euro bloc and -14.4% and +1.3 in Germany, respectively.

He and his boss will review for the cabinet the recent revival of the capital markets in Israel and abroad, the growth in tax revenues recorded for July and the increase improvement in various local growth indexes. Steinitz and Ariav will also point out that in the past four months the shekel has appreciated by more than 10% against the dollar and is performing similarly well against most major currencies.