JERUSALEM-ISRAELI ECONOMY Small economic impact seen on Israel economy from war -FinMin

Record ID: 398697

  • Title: JERUSALEM-ISRAELI ECONOMY Small economic impact seen on Israel economy from war -FinMin
  • Date: 31st August 2014
  • Summary: JERUSALEM (AUGUST 31, 2014) (REUTERS) VARIOUS OF ISRAELI FINANCE MINISTER, YAIR LAPID, AT PODIUM REPORTERS AT NEWS CONFERENCE (SOUNDBITE) (English) ISRAELI FINANCE MINISTER, YAIR LAPID, SAYING: "We expect a small decrease in growth as a result of the operation, particularly due to the impact on tourism, but experience shows that growth will return quickly and strongly as h
  • Embargoed: 15th September 2014 13:00
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  • Location: Jerusalem
  • City:
  • Country: Israel
  • Topics: General
  • Reuters ID: LVA5YBQ854N1WLOXSVNF7FWC9FI3
  • Story Text: Israeli Finance Minister Yair Lapid said on Sunday (August 31) that Israel's economy will take a minor hit from Israel's 50-day war against Hamas in the Gaza Strip.
    Prior to the conflict that ended on Aug. 26 with a ceasefire agreement, the economy was forecast to grow 2.9 percent in 2014.
    "We expect a small decrease in growth as a result of the operation, particularly due to the impact on tourism, but experience shows that growth will return quickly and strongly as has happened in former (military) campaigns," said Lapid
    The Bank of Israel has estimated growth would be reduced this year by as much as a half-point due to the conflict.
    Lapid reiterated that the 2014 budget will be able to bear most of the costs of the war but that the 2015 deficit target will have to be raised from 2.5 percent of gross domestic product to accommodate higher military spending.
    Last week, Lapid proposed to raise the target to above 3 percent of GDP, rejecting the Bank of Israel's demands to raise taxes to cover a large budget hole, saying that would harm households and the economy.
    Lapid declined to give a new 2015 deficit target saying: "It all depends on what kinds of expenses we will have on security, It's higher than expected and wanted but this is what happens when you have military operations. I think it is the longest military operation we had since the Israeli independence war so there is a price to be paid," added Lapid.
    Bank of Israel Governor Karnit Flug warned of economic consequences if tax income was not raised and the war of words between Flug and Lapid was viewed in the Israeli press as a battle between the two sides.
    Flug and Lapid met earlier in the day and agreed to maintain an open dialogue on all issues.
    To help pay for costs of the war and aid those in the south - where most of the damage occurred - the cabinet on Sunday approved a cut of 2 percent to ministries' budgets this year.
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