The BoI believes that growth will be led by the business sector, which in the updated forecast is expected to expand by 6.2%. Forecast may change due to slowdown in some sectors
The Bank of Israel (BoI) published last week its updated growth forecast for 2007 predicting 5.1% GDP growth, up half a percentage point from its previous forecast of 4.6% published in December 2006.
The BoI believes that growth will be led by the business sector, which in the updated forecast is expected to expand by 6.2%. The BoI also predicts an increase in the trade surplus in 2007.
In a detailed analysis the BoI noted that the main changes that led to the upward adjustment of the forecast included: The high rate of GDP growth, The lower than expected unemployment rate in Q4 of 2006, and a high rate of increase of private consumption.
The BoI warned however that the forecast may change due to the fact that there was a slower than expected recovery in incoming tourism, a slowdown in investment in the principal industries in Q4/06 and the continued slowdown in imports of capital goods.