Recent Economic Developments, 96

13/02/2002
All Press Releases In Subject:
The Economy and Economic Activity

Recent Economic Developments, 96

Overview:

Indicators of activity in the principal industries in the second half of 2001 (the period reviewed) show that it continued to contract, and some show that the decline became more severe. In the last two months, however, there were some signs that activity was stabilizing at a low level (Figure 1). The contraction of GDP, and in particular of business-sector product, intensified in the period reviewed; domestic uses fell; the state-of-the economy index continued on the downward path which started in 2000:IV, and the deficit in the goods and services account of the balance of payments grew, with both imports and exports falling, albeit at a slower rate in the fourth quarter. These developments were reflected in a rate of inflation that was lower than expected and a rapid rise in unemployment, which reached 9.9 percent in November. At the end of December 2001 and the beginning of January 2002 the NIS depreciated steeply, as a result of certain policy measures introduced, including a two-percentage-point reduction in the Bank of Israel’s interest rate.

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