The Palestinian Intifada will lead to a decrease estimated at 1 percent of the Israeli economic growth, equivalent to one billion dollars, reported Haaretz on Tuesday quoting a Finance Ministry top official.
"Economic growth in 2001 will range between 4.0 and 4.5 percent, and will not reach 5 percent as we expected, due to the events in the territories. For the same reason, unemployment in 2001 will be 8.4 percent and not 8.1 percent as the treasury expected until recently," the director-general of the Finance Ministry Avi Ben-Bassat was quoted by the paper as saying Monday.
Ben-Bassat was speaking at a press conference marking the presentation to the Knesset of the 2001 NIS 245.8 billion ($60b approximately) state budget.
Ben-Bassat said that “it was still difficult to assess the economic implications of the security situation, since no one knows how long the current round of violence will last or what the political ramifications might be.” However, he said that it is already clear that the tourism industry has been hit hard and that trade with the Palestinians has suffered.
Ben-Bassat noted that Israeli exports to the territories total about $2 billion annually, comprising about 5 percent of total exports. Exports to Gaza have been affected less than those to the West Bank; since Gaza has clear borders and a fence, it is easier to channel trade through the Gazan crossing points.
Speaking at the same press conference, Finance Minister Avraham Shochat was quoted by Haaretz as saying that if it becomes apparent that the new budget will not win Knesset approval, he will not submit it for a preliminary reading.
Shochat said that he has met with the leaders of all the opposition factions in recent days and believes that there is a reasonable chance that some of them will agree to support the budget "at a price not higher than the cost of the coalition agreements last year." (These coalition deals cost about a half a billion shekels last year,) according to the Israeli daily – Albawaba.com
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