The International Monetary Fund cut Israel’s GDP growth forecast for 2023 to 2.5% from 2.9% in its latest forecast in March 2023. Israel recorded GDP growth of 6.5% in 2022.
The International Monetary Fund writes that judicial reform is one reason for lowering growth forecasts. The report said: “Persistent uncertainty about judicial reform presents a significant downside risk to growth. In the absence of a lasting and politically sustainable solution, continued uncertainty could lead to a significant increase in the price of risk in the economy, tightening financial conditions and impeding investment and consumption, with repercussions.” potential for growth, in the long run as well.”
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In its recommendations, the report stresses that “lastingly reducing uncertainty about judicial reform requires a politically sustainable solution that is clearly communicated and well understood both domestically and abroad.”
The report was written by a delegation from the International Monetary Fund that completed its visit to Israel this week, and the preliminary version was presented to Finance Minister Bezalel Smotrich and Bank of Israel Governor Prof. Amir Yaron today.
The IMF report has significant impact abroad as it is often cited by foreign investors checking the situation in Israel who seek objective and impartial data and opinions from organizations such as the International Monetary Fund and the Organization for Economic Co-operation and Development. The Israeli Ministry of Finance also uses the IMF report and the 2023 budget refers to the IMF’s projections on growth and the fiscal deficit.
The IMF also examines long-term elements relevant to Israel’s economic development, but unlike rating agencies, the IMF is less concerned about Israel’s debt repayment capacity.
Published by Globes, Israel business news – en.globes.co.il – on May 10, 2023.
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