Israel’s economy is resilient to geopolitical shocks, while a positive outcome to peace talks with the Palestinians could help growth, Bank of Israel Governor Karnit Flug said today.
Israel’s economy is doing “relatively well,” with a growth rate of 3.3 percent last year, faster than in most industrial economies, and unemployment of 6.3 percent that is about half the rate in Europe, Flug said at a briefing for foreign journalists in Jerusalem. At the same time, output is below potential, she said.
“A positive outcome of the talks would be favorable for the prospects of the economy in terms of growth,” Flug said. “We should we remember that we’ve had a lot of experience with geopolitical shocks, and the Israeli economy has shown resilience to these shocks.”
Palestinian and Israeli officials are to meet today with U.S. envoy Martin Indyk in a bid to salvage peace talks thrown in doubt last week after U.S. Secretary of State John Kerry said he would consult with President Barack Obama on whether to continue them. Negotiations hit an impasse after Israel canceled the release of 26 Palestinian prisoners and the Palestinians renewed efforts to gain recognition as a state at the United Nations.
“When we look from 30,000 feet, the state of the economy looks quite good,” said Flug. “Not everything is as bright when you look deeper.”
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