International Monetary Fund: Israeli economy will grow by 5% this year


by Ifi Reporter Category:Capital Market Apr 6, 2021

The International Monetary Fund has published its first global economic forecast for 2021, which updates the growth forecast for the Israeli economy: According to the fund's economists, the Israeli economy will grow by 5% this year compared to 4.1% forecast in January 2021.
The growth forecast of the Fund for 2022 for the Israeli economy is 4.3%. The IMF publishes the world forecast twice a year: in April and October.
 Last October, when the fund published its latest forecast for the global economy, the outlook was for a much sharper recession than actually happened: the forecast was for negative growth of about 6%, while in practice GDP fell by only 2.5%.
The Fund's economists' forecast for Israel stems from a much broader optimism about the entire world and the exit from the epidemic or at least from its difficult parts: the growth forecast of the global economy has also been updated. In October 2020, the global growth forecast was 5.2%, in January 5.5% and the current forecast is 6%.
The fund forecasts that the US growth rate in 2021 will be 6.4%, compared to the previous forecast at the time of 3.1%.
Following Israel's impressive performance in exporting high - tech services and foreign direct investment, IMF economists also updated upward the forecast of the current account surplus: from 3.5% of GDP to 4.1% of GDP. 2020 data in the context of a current account also surprised the fund, since in October 2020 they forecast a surplus of 3.5% of GDP, when it ended in 2020 at almost 5% of GDP. The IMF is also more optimistic about the unemployment situation in Israel. According to the updated forecast, the average unemployment rate in 2021 is expected to be 5% of the labor force, compared to 5.6% in the previous forecast. The fund also believes that in 2022 unemployment is expected. To drop again to a level of 4.6%.
"Although the uncertainty remains high as the further development of the epidemic is unclear, the exit from this health and economic crisis seems to be in place," wrote Gita Gofinat, the IMF's chief economist. According to her, the recovery rate of the world economies is expected to be very diverse and will be related to "the rate of vaccination, the extent of support for macroeconomic policies, and structural factors such as the dependence of that economy on tourism".



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