The Israel Central Bureau of Statistics issued a report on the state of the economy. The press headlines blared: 2002 had been the worst year in Israel, economically speaking, since 1953. What did Sharon do? Did he call together a meeting of his economic advisors to see what could be done? Did he fire his finance minister? Oh no. He summoned chief government statistician Prof. Shlomo Yitzhaki to his office for a reprimand. Under pressure, the office issued a clarification, noting that the Israeli economy is much stronger than in 1953. It’s just that the last time the GDP had declined for two years in a row, was, um, 1953. Then intense pressures were brought to bear on financial correspondents by the Prime Minister’s Office to repudiate the headlines.
Here are some highlights of the report, as noted in Ha’aretz:
“The year 2002 was a record-breaking bad year for Israel’s economy, which registered a second 12-month period of negative growth in a row for the first time in the country’s history. In 2002, gross domestic product shrank by 1 percent, according to preliminary figures released Tuesday by the Central Bureau of Statistics.”
“Only two other countries in the western world are expecting to register negative growth for 2002 – Switzerland and Japan. And even they managed to beat Israel’s 1 percent contraction. Japan’s economy shrunk by 0.7 percent, while Switzerland’s GDP contracted by “only” 0.2 percent.”
“In 2002, Israel’s GDP fell by 1 percent, following a 0.9 percent contraction in 2001. The population, however, grew by 2 percent, pushing GDP per capita (an oft-used measure of standard of living) down to NIS 73,900 a year – a 3-percent decrease from 2001, a year when GDP per capita contracted 3.2 percent.”
“Due to the weakening of the shekel, the GDP is even lower when assessed in dollar terms and now stands at $15,600. In 2000, GDP per capita stood at nearly $18,000. The fall in standard of living in both 2002 and 2001 followed a year in which GDP per capita increased by 4.6 percent. In comparison, among the OECD countries, GDP per capita increased a modest (but positive) 0.8 percent, following an increase of 0.5 percent in the previous year.”
“In its preliminary overview of the year, the bureau also reported that unemployment was now at 10.4 percent – up from 9.4 percent a year ago. This is also in stark contrast to the OECD norm. Of all western economies, only Spain had a higher portion of its population out of work – 11.2 percent. In the United States, unemployment in 2002 increased to 5.8 percent (from 4.8 percent in 2001). The average for OECD countries was 6.8 percent, in Britain – 5.2 percent, and in Germany – 7.8 percent.”
“However, the proportion of the workforce in the general population is relatively low in Israel, at 54 percent – little changed on 2001. Though unemployment increased in the past year, the economy actually employed slightly more people overall (an increase of 0.5 percent) and numbers of hours worked also increased, by 0.9 percent. Gross wages fell 5 percent in the past year, and this was even more pronounced in the business sector, were wages fell 6 percent.”
[Please note as well, that of those 54% employed, a huge proportion work in the government sector, many for the defense forces. The number employed in the productive business sector is extremely small by Western standards.]
“According to the figures published yesterday, output in the business sector fell 3.1 percent, after falling 2.4 percent in 2001.”
