December 06, 2006

The Israeli economic "miracle"

We can thank Netanyahu's much-vilified reforms for this:

It is also becoming clear that Israel's economy is growing faster than all Western economies. Even the war did not slow the pace. The mirror of growth is employment, which has improved greatly. A total of 240,000 Israelis joined the workforce in the past three years, supporting themselves instead of relying on government handouts - and that is the most important news for society. The unemployment rate has dropped to its lowest level in a decade, to 8.3 percent of the workforce compared to 10.7 percent in 2003. The number of people receiving unemployment payments fell from 97,000 in 2003 to 57,000, and the number receiving income support decreased from 155,000 to 140,000 in the same period.

Even the Tel Aviv Stock Exchange is doing the unexpected. In defiance of all the prophets of economic doom, it has jumped by 22 percent since the end of the war, to record heights. And as the stock market sees the face of the future, it apparently envisions greatness ahead.

Bank of Israel Governor Stanley Fischer recently joined the party, cutting interest rates to below the U.S. rate: 5 percent, compared to 5.25 in the U.S. And instead of an immediate devaluation, the shekel actually rose in response.

Will the economics textbooks need to be revised? Apparently not. There is a single explanation for all the good things described here: A responsible, free-market economic policy expressed through budgetary restraint, a small deficit, tax cuts, reforms, privatization and opening the economy to the free movement of goods, services and capital, or in short: Less government, more business.

UPDATE: Netanyahu has a new web site, with a blog. And don't miss this video.

Posted by David Boxenhorn at December 6, 2006 08:11 PM | TrackBacks
Comments & Trackbacks

Thanks for video. I'm impressed...

Posted by: Rob at December 11, 2006 06:08 AM Permalink

It's hard to believe that with all the garbage going on in Israel that the shekel is stronger than the dollar.

Posted by: muse at December 13, 2006 05:28 AM Permalink

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