| 30.12.2007 |
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| Address by the Governor of the Bank of Israel, Professor Stanley Fischer, Today, to the Executive Committee of the Manufacturers Association of Israel |
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| The Governor of the Bank of Israel, Prof. Stanley Fischer, today told the Executive Committee of the Manufacturers Association of Israel that the country’s economic environment should be changed in order to make the economy a magnet for domestic and foreign investment. To bring this about, all authorities should work hand-in-hand and spearhead such reforms as are needed to untangle the bureaucratic red tape that exists, foremost in regard to land. This is part of the government’s responsibility for allowing the business sector to function and develop by adopting a pro-growth macroeconomic policy and eliminating barriers. |
| The Governor stated with emphasis that Israel holds a relatively high ranking in two international reports – the World Economic Forum’s “Global Competitiveness Report” and the World Bank’s “Doing Business Report.” According to these reports, however, alongside fields in which Israel commands an excellent position – e.g., shareholder protection and credit availability – were other aspects in which the country rated especially poorly during the period at issue. These aspects are related to inefficiency and government bureaucracy, including matters related to title registration and building. The Governor added that the citizens of Israel did not need these reports to know this but should not treat the situation with acquiescence. |
| The Governor emphasized the auspicious state of the economy, the rapid growth (projected this year at 5.4 percent or more), and the continuation of financial and economic stability. The inflation rate is currently slightly above the upper bound of the target but is expected to return to the target by the middle of next year. The Bank of Israel will do everything can to bring this about. The Governor noted that the depreciation of the USD against the NIS is not exceptionally intense relative to its decline against other currencies around the world – and that the depreciation traces to American economic developments. However, since only one-third of Israel’s exports go to the dollar bloc and another third reach the eurozone, the NIS exchange rate against the average rate of currencies of Israel’s trade partners approximates one of the most depreciated levels ever. |
| The Governor added that the rapid growth is benefiting the entire population is raising the standard of living of the weak groups as well. The more perseverant we are in following the path of long-term rapid growth, the more people will find work and the more the standard of living of the citizenry, of whatever class, will improve. Evidence of this is: (a) the falling poverty rate in 2006, by a relative measure that relates mainly to income gaps, and the decline in this parameter in 2005 and 2006 by the absolute measure of the ability to buy a basic basket of goods; (b) the falling unemployment rate, including that of the poorly schooled; (c) the increase in the labor-force participation rate, even in peripheral areas; (d) rising rates of employment and average real wage, even in traditional industries. |
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