This 2012 Article IV Consultation reports that Israel has emerged from the 2008–09 global crisis with strong economic growth, a resilient banking system, and unemployment at historic lows. Exports, at 40 percent of GDP, depend on global demand for high-technology products, such as electronics and pharmaceuticals, and communications. One-third of exports go directly to Europe, with more routed there indirectly. Given the country’s weak direct trade linkages to the region, regional tensions mainly affect Israel through security, investor and consumer confidence, and public finances.
law, a Monetary Policy Committee (MPC), which includes the Governor of the BOI as chairmen, two additional BOImembers and three external members, began operating in October 2011. The BOI will carefully study the staff’s suggestions regarding possible improvements in the practices and procedures of the MPC’s work. On the subject of emphasizing the midpoint of the inflation target band of 1 to 3 percent, given the high volatility of inflation, the band allows the BOI to credibly balance between its objectives.
Financial Sector Stability Assessment
on the features and properties of the model, see the accompanying Selected Issues paper—“A Simple Forecasting and Policy Analysis System for Israel: Structure and Applications.”
13 BoI staff is planning to visit the Fund to continue the work that was started during the December mission.
14 According to the current draft of the law, the monetary committee will be made up of equal number of BoImembers and outside public representatives. In the event of a tied vote, the Chairman (the governor) will have the casting vote. The minutes of the monetary
This 2005 Article IV Consultation highlights that following a strong performance in 2004, Israel’s economic expansion accelerated in 2005, supported by a relatively favorable global economic environment, an improvement in the security situation, and prudent policies. Real GDP grew at an estimated 5.2 percent in 2005. Inflation is slightly higher than a year ago, but remains in check. The unemployment rate continues to fall, but remains high. The macroeconomic policies and structural reforms of recent years have opened up the economy, increased its competitiveness, and attracted foreign investment.