Israel economy grows, but more needed

TEL AVİV

Israel’s PM Benjamin Netanyahu (R) sits next to the Secretary-General of OECD during the weekly cabinet meeting.

Israel’s economy is in good shape, but further efforts are needed to fight poverty and close the gap in living standards with other leading nations, according to the OECD’s Economic Survey of Israel 2013. 

The survey, presented by OECD Secretary-General Angel Gurría to Prime Minister Benyamin Netanyahu during a cabinet meeting, underscores the importance of maintaining prudent macroeconomic frameworks and building momentum behind structural reforms, particularly in education, social and competition policies. It also calls on Israel to ensure that environmental externalities are more fully incorporated into government, household and business decisions. 

Spot on housing market

“With strong growth projected for the coming two years and unemployment at historically low levels, the near-term outlook for the Israeli economy is very auspicious,” OECD Secretary-General Angel Gurría said. “To increase well-being and reduce socio-economic gaps, all citizens must have access to good education and opportunities to develop skills. Making work pay is the way forward,” Mr Gurría said.

The survey urges continued vigilance of Israel’s housing market and points out the need to monitor and respond to financial market risks. When global financial conditions normalize and capital flows stabilize, the authorities should plan to tighten monetary policy, as necessary, while terminating intervention in the foreign currency market. 

On the fiscal front, the OECD warns that measures may be required to raise revenue, particularly beyond 2014, to meet previously announced budgetary targets. Introduction of a stronger medium-term perspective in budgeting would improve spending efficiency.