Business & Investment

BoI raises growth forecast without changing rates

As expected, the Bank of Israel’s Financial Services Commission, led by Governor Amir Yaron, has decided to keep interest rates at a record low of 0.1%.

At the same time, the Bank of Israel has expressed cautious optimism about 2021 in the light of Israel’s willingness to vaccinate. “The fast pace of the Israeli vaccination process has increased optimism about the return of the economy to a rapid growth trajectory next year, but the risks to economic activity remain high and have a negative impact on the economy, especially the economy. Therefore, the Commission will continue to use a variety of tools to expand the scope of monetary policy coverage and ensure the continued and orderly functioning of the financial market. The Commission includes interest rate tools. We will use existing tools and operate additional tools to the extent we evaluate them as necessary to achieve our monetary policy goals and mitigate the negative economic impact of the crisis. “

The Bank of Israel Research Department has revised its growth forecast for the next two years and predicts that GDP will shrink by about 3.7% in 2020.

The Bank of Israel said, “The revised forecast features two potential scenarios that are affected by the pace of inoculation of the population. Given the launch of the inoculation campaign, both scenarios were announced in October. More positive than expected. In a rapid inoculation scenario, towards the end of the second quarter, the government will no longer impose significant restrictions on economic activity for health reasons, and GDP is expected to increase by 6.3% in 2021, broad. The unemployment rate is expected to decline during the year, reaching 7.7% of the workforce in the fourth quarter of 2021. “

“By 2022, GDP is expected to increase by 5.8%, unemployment will continue to fall to 5.4%, and the debt-to-GDP ratio is expected to be 75%. In a later inoculation scenario, GDP will be in mid-2022. It is expected to increase by 3.5% in 2021 and the wide unemployment rate will drop to about 11%. In 2022, GDP growth will be 6% and the unemployment rate will drop to 7%. The debt-to-GDP ratio in 2022 is expected to be 82%. Given the fast pace of inoculation, the rapid inoculation scenario now seems much more likely to work than the slow inoculation scenario. “

Israeli Business News, Published by Gloves- en.globes.co.il -January 4, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

BoI raises growth forecast without changing rates

https://en.globes.co.il/en/article-1001355885#utm_source=RSS BoI raises growth forecast without changing rates

Back to top button