The International Monetary Fund (IMF) has cut Israel's 2023 GDP growth forecast to 2.5% from 2.9% in its most recent forecast in March 2023. Israel recorded GDP growth of 6.5% in 2022.
The IMF wrote that the judicial overhaul is one of the reasons for the cut in the growth forecast. The report said, "Continued uncertainty around the judicial reform presents a notable downside risk to growth. Absent the emergence of a durable and politically sustainable solution, continued uncertainty could significantly increase the price of risk in the economy, tightening financial conditions and hindering investment and consumption, with potential repercussions for growth, also in the longer term."
The report stressed in its recommendations, "Permanently lowering the uncertainty around judicial reform requires a politically sustainable solution that is clearly communicated and well understood both domestically and abroad."
The report was written by an IMF delegation that concluded its visit to Israel this week and the preliminary version was presented to Minister of Finance Bezalel Smotrich and Bank of Israel Governor Prof. Amir Yaron today.
The IMF report has major influence overseas where it is often referred to by overseas investors checking out the situation in Israel who are seeking objective and neutral data and opinions from organizations like the IMF and OECD. Israel's Ministry of Finance also uses the IMF report and the 2023 budget refers to the IMF's forecasts on growth and the fiscal deficit.
The IMF also examines relevant long-term elements for Israel's economic development but in contrast to the ratings agencies the IMF is less concerned about Israel's ability to repay debt.
Published by Globes, Israel business news - en.globes.co.il - on May 10, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.