“We’re seeing the start of global recovery, which is partly due to the massive interventions by governments and unprecedented capital injections. As a consequence, governments have also developed unprecedented deficits. At the same time, it’s possible to see financial recovery and a substantial improvement in global trade, even though it has not yet returned to pre-crisis levels,” Israel’s Ministry of Finance director general Yarom Ariav told the Knesset Finance Committee today.
Ariav said that the issue most worrying governments now is high unemployment levels, although there has been recovery in this variable as well. He noted another positive factor: expectations of recovery, which is again driving the economy.
“All indications show that we’re one of the first economies to emerge from the crisis. If we look at the main economies in the developed world, there was still contraction in the second quarter of 2009, while we had annualized growth of 1%. In addition, it’s important to remember that we were among the last economies to record negative growth.”
Ariav added, “It’s important to remember that we entered the crisis with excellent conditions: rapid growth, a current account surplus, and a tiny deficit. We also correctly characterized the economic conditions and the crisis, and we quickly realized that the correct remedies for the US and UK were not relevant for us.”
As for the difficulties ahead, Ariav said that the debt-to-GDP ratio would rise over the next two year, not only in Israel, but worldwide.
{Globes/Yair Alpert-Matzav.com Israel}
