BICOM

The Bank of Israel submitted its report on Israel’s economy for 2011 yesterday, in a document that showed some positive trends but also highlighted the rising costs of living. The bank also noted that income inequality has stabilised since 2007. Both factors motivated the social protests of summer 2011.

In the report, the Bank of Israel economists said rising housing prices as the foremost reason for popular discontent that caused the mass protests in the summer of 2011. “The rise of rent prices in recent years has increased the burden on renters, who make up 30% of the households,” the report read.  Other factors that roused social protests in Israel according to the report were increases in oil prices and certain food products. Government policies aimed at cutting the budget deficit also posed yet another impetus for the protest movement, as they increased the gap between the rich and the poor, the report said.

Speaking to reporters about the report yesterday, the Bank of Israel Governor, Stanley Fischer said that while the economy is doing relatively well this year, it could face trouble in 2013. “The state of the economy is good, but not excellent,” he said. “Our forecast is that the growth this year will reach a rate of 3.1%, a respectable growth but not on par with the average levels witnessed in 2004-2008.”

Addressing the report, Israel’s Prime Minister Benjamin Netanyahu lauded the economy’s growth. “Israel’s economy has grown by 4.7% last year, which is highly impressive, especially in light of the worldwide economic crisis.” The PM added that he was particularly glad to hear the inequality between sectors has stabilised, and that “poverty continued to drop. These are the biggest challenges faced by the government I’m heading.”