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Update of the Bank of Israel's macroeconomic forecasts for 2010
The macroeconomic forecast for 2010 has been revised upwards as a result of positive information regarding economic activity in the second half of 2009, both globally and in Israel, and in light of improved forecasts of global growth and world trade in 2010.
GDP is expected to grow by 3.5 percent in 2010 (compared with 2.5 percent in the previous forecast). The unemployment rate is expected to drop to 7.1 percent on average, consistent with a level of less than 7 percent at the end of 2010.
Growth is being led by an increase in the demand for exports resulting from the recovery in the global economy. Domestic uses are increasing more slowly than exports, except for investment and the consumption of durables which are rising rapidly. The buoyant increase in the consumption of durables and in investment in machinery, equipment and transportation vehicles brings in its wake a surge in imports, so that the surplus in the current account is expected to contract.
The main risk in the forecast is that of a slower recovery in the global economy than that on which the forecast is based.
Main economic indicators, forecasts for 2009 and 2010 and the previous forecast
  2009 CBS estimate 31.12.09 2010 estimate (previous estimate in parentheses)*
Main results (rates of change, percent, unless stated otherwise)
1.GDP 0.5 3.5 (2.5)
2.Business sector product 0.4 4.1 (2.8)
3.Exports (excluding diamonds) 11.0 8.6 (6.2)
4. Private consumption 1.1 4.8 (1.1)
4.a. of which excluding durables 2.2 3.1 (2.2)
5. Gross domestic investment 9.4 9.3 (1.9)
5.a. of which fixed investment 6.7 4.9 (2.0)
6.Civilian imports (excluding diamonds) 13.4 11.4 (7.3)
7.Current account ($ billion) 7.2 3.0 (4.9)
8.Unemployment rate (percent) 7.7 7.1 (8.3)
* The previous estimate was published on 1 September 2009
  The main assumptions underlying the forecast for 2010 (previous assumptions in parentheses)
  World trade an increase of 7 percent (4.4 percent)
  Terms of tradea deterioration of 2.1 percent (3.0 percent)
  Public expenditurean increase of 0.6 percent (1.8 percent)
  Public consumptionan increase of 1.0 percent (1.0 percent)
  Per capita transfer paymentsan increase of 1.8 percent (1.3 percent )
  VAT16 percent (16.5 percent); Corporate tax25 percent (25 percent)
  GDP Growth Path during the Year