6.6% GDP
The Israeli gross domestic product (GDP) grew at 6.6% last year (April 2005-6). This was much higher than anticipated and was almost entirely the result of the conservative policies of Benjamin Netanyahu as Finance Minister in Sharon's government. However, the Israeli electorate did not reward him for his performance, on the contrary they punished him. In fact, as Caroline Glick, one of the Jerusalem Post's great columnists pointed our in her column this weekend ("Israel's premeditated market failure"), from the Israeli press you would assume that the Israeli economy is failing abysmally. The cutting of many social programs led the Labor Party under Amir Peretz and the Pensioner's Party to garner seats by promising to increase spending on social programs. And the doom and gloom was enhanced by personal stories relating to the colon cancer patient's demonstration outside the Health Ministry, that is now over since the Government agreed to increase spending by mNIS 350.
Of course, Glick blames the leftist leaning Israeli press for its emphasis on the downside of the economy and for not properly balancing the stories with the increased foreign investment, such as the b$4 deal of Warren Buffet for Iscar. If one compares Israel to the performance of the rest of the world then it is doing very well, the EU generally has a few percent of GDP increase (average 2.5%, except for Ireland that is higher), the US is at 5.5%, surprisingly high given the price of crude oil, although India at 9% and China at 10% are far ahead. But, then again one has to take into account the level from which they start.
Certainly the economy has implications for other areas. Although the Defense budget is likely to be cut (by mNIS 500), nevertheless the general improvement in the economy, as evidenced by the increase in tourism and spending, should allow Israel to continue to grow. By contrast the PA is in dire financial straits, unable to pay Government salaries, and the PA under Hamas is even talking of cutting jobs and salaries. This makes sense, although most of the jobs to be cut are held by Fatah supporters, so it won't go over well. One might enquire why the economies of the Arab States do so poorly, except perhaps for the Gulf States, and the answer might be that they are all controlled economies and there is an enormous amount of corruption.
While Israel continues to face political problems, those who put their faith in economic arguments, including the capitalists and the Marxists, might find solace in Israel's economic performance. In her analysis, Glick as usual is too much of a pessimist, defence problems don't grow just because the liberal press distorts the true picture of the economy.
Of course, Glick blames the leftist leaning Israeli press for its emphasis on the downside of the economy and for not properly balancing the stories with the increased foreign investment, such as the b$4 deal of Warren Buffet for Iscar. If one compares Israel to the performance of the rest of the world then it is doing very well, the EU generally has a few percent of GDP increase (average 2.5%, except for Ireland that is higher), the US is at 5.5%, surprisingly high given the price of crude oil, although India at 9% and China at 10% are far ahead. But, then again one has to take into account the level from which they start.
Certainly the economy has implications for other areas. Although the Defense budget is likely to be cut (by mNIS 500), nevertheless the general improvement in the economy, as evidenced by the increase in tourism and spending, should allow Israel to continue to grow. By contrast the PA is in dire financial straits, unable to pay Government salaries, and the PA under Hamas is even talking of cutting jobs and salaries. This makes sense, although most of the jobs to be cut are held by Fatah supporters, so it won't go over well. One might enquire why the economies of the Arab States do so poorly, except perhaps for the Gulf States, and the answer might be that they are all controlled economies and there is an enormous amount of corruption.
While Israel continues to face political problems, those who put their faith in economic arguments, including the capitalists and the Marxists, might find solace in Israel's economic performance. In her analysis, Glick as usual is too much of a pessimist, defence problems don't grow just because the liberal press distorts the true picture of the economy.
posted by Jack Cohen at 10:01 AM
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