Industry Ministry lowers investment forecast to zero in 2004

Investment in industry will fall by 5% this year. A ray of hope: higher exports.

Hadas Manor    9 Nov 03   17:36

The Ministry of Industry, Trade and Labor planning and economy division revised its macroeconomic parameters for 2003 and forecasts for 2004 downward. In the previous forecasts, published in August, the ministry predicted -2-0% growth investment in industry in 2003, and 3% growth in 2004. The ministry now predicts minus 5% growth in investment in 2003 and zero growth in 2004.

The ministry cut its prediction of export growth, excluding diamonds, in 2003 from 6% to 4.5%, and cut its prediction for 2004 from 7.5% to 6-7%, out of potential annual growth of 11-12%.

The potential growth figure assumes higher exports by traditional and mixed-technology industries to Europe, based on the strong euro, and not actual growth. The Ministry of Industry notes that if the signs of economic recovery in the US are realized, it will lead to higher high-tech exports starting in the second half of 2004.

The Ministry of Industry also cut it prediction for employment expansion by 0.5% to zero. "The previous forecast was semi-optimistic, and in view of the third quarter figures, the new forecast is much less optimistic," said ministry planning and economy division head Mordechai Ish-Shalom.

The new forecast is based on an analysis of Central Bureau of Statistics figures and third quarter economic trend data that show falling investment, production and employment in 2003. Industrial exports will grow, albeit, less than expected.

Published by Globes [online] - on November 9, 2003