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Israel’s Economic Outlook and Financial Policy Settings: the View from the OECD Peter Jarrett

Israel’s Economic Outlook and Financial Policy Settings: the View from the OECD Peter Jarrett Presentation to the Globes Business Conference 11 December 2011. Better-than-average GDP growth. Year-on-year percentage change. Domestic demand remains robust. Year-on-year percentage change.

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Israel’s Economic Outlook and Financial Policy Settings: the View from the OECD Peter Jarrett

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  1. Israel’s Economic Outlook and Financial Policy Settings: the View from the OECD Peter Jarrett Presentation to the Globes Business Conference 11 December 2011

  2. Better-than-average GDP growth Year-on-year percentage change

  3. Domestic demand remains robust Year-on-year percentage change

  4. Investment is still buoyant Year-on-year percentage change

  5. The labour market is performing well Per cent

  6. The output gap is near zero Deviation from GDP trend (%)

  7. External trade is weakening Year-on-year percentage change

  8. But unexceptional per capita GDP performance Gap to the upper half of OECD countries

  9. And very high and rising poverty rates

  10. Short-term economic outlook Contributions to changes in real GDP (percentage of real GDP in previous year). As a percentage of GDP. Excluding Bank of Israel profits and the implicit costs of CPI-indexed government bonds.

  11. Inflation outcomes and policy rates Year-on-year percentage change in prices

  12. The exchange rate and currency purchases

  13. Foreign exchange reserves are high Per cent of GDP

  14. Only business debt has been rising

  15. Banks have shifted to housing loans

  16. The expansion of the corporate bond market 1. Left axis

  17. Banking-sector risk and capital adequacy

  18. Net pension replacement rates1 Highest ten OECD countries and Israel, including second-pillar pensions The simulation assumes individuals starting full-time careers at age 20. Unweighted average. OECD average excluding highest ten.

  19. Some other financial-sector advice • Take further macro-prudential actions if the housing market does not manage a soft landing • Strengthen co-ordination in financial supervision • As regards specific financial products: • Proceed cautiously with securitisation • Regulate bond markets more strictly if fragilities persist • Reform taxation of second-pillar pension saving • Do not raise mandatory pension provisions any further

  20. Influential business groups are not unusual The stock-market share of the 20 largest family/business groups

  21. Thank you!

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