Bank of Israel Governor designate Leo Leiderman will be focusing on economic growth, with an emphasis on exports and investments, Globes reports.
“It’s very important now to get the Israeli economy back to growth. We must move the engines of growth in the economy with very much higher power. I’m certain that we can do it very soon. Give me 100 days grace and then we will already begin to see results.”
“We must mainly handle increasing exports and enlarging investments in the economy. Exports and investments have been slowing down for some time and we must get them back onto a better path towards the 2014 budget year so that they will then be working at full production,” he added.
Regarding high housing prices, Leiderman recently stated that he agrees with his predecessor Stanley Fischer that it’s the government’s job to keep apartment prices down, not the central bank’s, Haaretz reported.
“As long as the United States and the euro zone have high and even rising unemployment rates and there is a real fear of returning to a recession, central banks won’t hurry to raise interest rates,” Leiderman said at a conference last month held by Israeli credit-rating company Midroog. “We’re still far from that, and the expectation that inflation will be very low only reinforces this assessment.”
Regarding economic growth, Leiderman is much more pessimistic than the Bank of Israel, which has forecast 3.8% growth for 2013 and 3.2% for 2014.
“The 12-month period between the middle of this year until the middle of 2014 is portrayed by our analysis at Bank Hapoalim’s economics department as a transition period in which Israeli economic growth is expected to fall to a disappointing 2.5% in annual terms,” said Leiderman. “Economic policy must emphasize the importance of returning to a growth environment above 3% — not including natural gas — in the second half of 2014.”
Leiderman sees housing prices on a rising curve, with the sector supporting growth. “Without a change in the government’s policy for releasing land [for development], it’s reasonable to assume that surplus demand for apartments in high-demand areas will even increase in 2014 and 2015, which will push prices higher,” he said. “With this in mind and given the expected growth slowdown, the housing market should turn into a key growth engine for the economy in the coming years.”