1 percent negative growth in 2002 is worst in the West Moti Bassok and Lior Kagan Haaretz, 1 January 2003 Israel's 1 percent negative economic growth was the lowest recorded in the West in 2002, according to preliminary figures released by the Central Bureau of Statistics yesterday. Only two other western countries are expected to register negative growth for the year - Japan at 0.7 percent and Switzerland at 0.2 percent. In a record-breaking bad year for the economy, Israel registered a second 12-month period of negative growth in a row for the first time in history. The press reports that 2002 had been the worst year, economically speaking since 1953, greatly angered Prime Minister Ariel Sharon, who summoned chief government statistician Prof. Shlomo Yitzhaki to his office for a reprimand. The Central Bureau of Statistics is directly answerable to the Prime Minister's Office. In 2002, Israel's GDP fell by 1 percent, following a 0.9 percent contraction in 2001. The population, however, grew by 2 percent, pushing GDP per capita (an oft-used measure of standard of living) down to NIS 73,900 a year - a 3-percent decrease from 2001, a year when GDP per capita contracted 3.2 percent. The last time GDP per capita fell for the second consecutive year in Israel was in 1953. Due to the weakening of the shekel, the GDP is even lower when assessed in dollar terms and now stands at $15,600. In 2000, GDP per capita stood at nearly $18,000. The fall in standard of living in both 2002 and 2001 followed a year in which GDP per capita increased by 4.6 percent. In comparison, among the OECD countries, GDP per capita increased a modest (but positive) 0.8 percent, following an increase of 0.5 percent in the previous year. Fewer jobs for more people In its preliminary overview of the year, the bureau also reported that unemployment was now at 10.4 percent - up from 9.4 percent a year ago. This is also in stark contrast to the OECD norm. Of all western economies, only Spain had a higher portion of its population out of work - 11.2 percent. In the United States, unemployment in 2002 increased to 5.8 percent (from 4.8 percent in 2001). The average for OECD countries was 6.8 percent, in Britain - 5.2 percent, and in Germany - 7.8 percent. However, the proportion of the workforce in the general population is relatively low in Israel, at 54 percent - little changed on 2001. Though unemployment increased in the past year, the economy actually employed slightly more people overall (an increase of 0.5 percent) and numbers of hours worked also increased, by 0.9 percent. Gross wages fell 5 percent in the past year, and this was even more pronounced in the business sector, were wages fell 6 percent. Industry too According to the figures published yesterday, output in the business sector fell 3.1 percent, after falling 2.4 percent in 2001, and rising by an exceptional 9.7 percent in 2000. But then, 2000 had been exceptional in many ways for Israel. The economy grew more than 6 percent in 2000, but slumped abruptly in the fourth quarter of that year, as peace talks fell apart, unrest choked off tourism, and the collapse of the Nasdaq stock market battered the country's high-tech sector, its main engine of growth. Consumer spending fell 0.6 percent in 2002 - the first decrease since 1980. Consumer spending per capita last year dropped by 2.6 percent, after a negligible 0.1 percent fall-off in the previous year. Specifically, private vehicle purchases decreased by 29 percent, furniture purchases by 12 percent and flights abroad by 4 percent. Industry was sorely affected, particularly among the start-ups in the high-tech fields. The diamond sector, however, helped temper the disappointing industry figures, with exports of polished diamonds increasing by 20.2 percent in 2002. Aside from diamonds, Israel's exports fell 9.7 percent in the year. Labor blames Sharon, Shalom After the release of yesterday's data, the Labor Party hastened to distribute a press release, compiled by party leader Amram Mitzna and former finance minister Avraham Shochat. The release stated that "Sharon and [Finance Minister] Silvan Shalom are to blame for the collapse of the Israeli economy. The Central Bureau of Statistics figures attest that the economic situation in 2002 is the worst since 1953." The release infuriated Sharon and Shalom, who immediately kicked off a counter-campaign. Under pressure from the Prime Minister's Office, the Central Bureau of Statistics released a clarification. "At a press conference held by the Central Bureau of Statistics, preliminary estimates of the national books for 2002 were presented, including growth rates for the last two years. It was explained that the rate at which GDP is shrinking declined from minus 4.9 percent in the second half of 2001 to around minus 0.2-minus 0.3 percent during 2002." Further down in the announcement, the Central Bureau of Statistics wrote that when asked when GDP had last contracted for two consecutive years, its representatives has answered, "Apparently in 1953, but they did not remember precisely." "When comparing between 1953 and 2002, the spokespersons related to growth rates alone," the bureau wrote in its clarification. "The level of GDP, in fixed prices, in 2002 is 19 times the GDP of 1953. Also, GDP per capita is 4.8 times more than it was in 1953. Therefore, from the perspective of standard of living, there is a huge difference between the two eras." After the bureau released its clarifications, intense pressures were brought to bear on financial correspondents by the Prime Minister's Office and treasury officials, who asked to note that 2002 was not the worst year since 1953. |
