Prime Minister Benjamin Netanyahu said yesterday the policies thathave kept the economy growing faster than the OECD average remainthe right ones for the future. "Israel up to now has done better than most of the OECD countries,indeed than most countries .... We've done better because wemaintained the right policies. We had greater growth than the OECD.We have much lower unemployment. |
We added 250,000 jobs in threeyears," Netanyahu told a press conference attended by OECDSecretary-General Angel Gurria. "The policies that have worked for us so far are the policies thatwill work for us in the future: control spending, be careful andresponsible, encourage growth, enact reforms." Netanyahu, Finance Minister Yuval Steinitz and Gurria met todiscuss the world economy and developments in Israel. Gurria alsomet with President Shimon Peres and the governor of the Bank ofIsrael, Stanley Fischer. Netanyahu did not provide specifics about his plans for the 2013budget or say whether tax increases were in the works, but he saidhis policies would continue. "Break up cartels, break upmonopolies, control government spending, and don't tax yourself toa recession," he said.
Netanyahu also talked about implementing reforms to lower the costof living. "There's no contradiction whatsoever between the rightgrowth market policies ... and social justice. They go hand inhand," he said. "The greatest danger that I see in Israel is thethinking that says that there is a contradiction." According to Steinitz, "We received a very severe warning that theglobal crisis has not only not disappeared, but there is a veryreal danger that it will [worsen] and that the threat to ournational economy and to the citizens of Israel still exists.Therefore, our main mission was and remains ..
reasonable growth... along with low unemployment." Referring to advice given by Gurria, including a reasonable deficitthat remains under control, Steinitz added: "If you do not maintainbudgetary responsibility ... you will endanger Israel's economy andits citizens." Gurria praised his hosts. "They have done very well, exceptionallywell, in a very, very difficult world economy.
The fact that yougrew at all in a year like 2009 - you were in decline and then yourecovered very fast to close to 5% in 2010 and 2011. You're goingto be above 3% this year, closer to 4% next year. This is quiteexceptional, and it is double or triple, depending on which part ofthe world you see, in terms of speed," Gurria said. "We are also looking at relatively tame inflation numbers.
Theunemployment rate is coming down. You just saw what happened withthe United States last week. It went up. In Europe, unfortunately,it is still going up, closer to 11% in the euro area on average,"he said, noting the particularly bad youth unemployment in someOECD countries.
Hope for Europe? Spain and Italy are doing all the right things and there is noreason they should be paying such high interest rates, Gurria said.He said Europe would end up stronger at the end of the debt crisis. "There is no reason why Spain should be paying 7%; there is noreason why Italy should be paying 6 1/2% for their money when theyare taking all the right decisions in terms of the constitutionalbudget amendment," he said. "They are working on their flexibility in their labor markets; theyhave increased their retirement age." Spain's borrowing costs have soared to around 6.6% for 10-yearbonds with the risk premium over safe haven German Bunds reaching aeuro zone record. Italian yields also passed 6% recently onbenchmark 10-year debt at auction. The Europeans "created a common currency, they did not create acommon fiscal mechanism.
Now they go back to fix that question andnow they are trying to deal with the consequences," Gurria said. "So I think Europe will in the end be stronger than it is today andwill have stronger institutions. It is the meantime that we have todeal with.".
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