ISRAEL MAKES A ROBUST RECOVERY.

It rains in Israel in January. As a result, according to a late February story in Globes (Rishon Le-Zion), retail sales stagnate. The rains, however, don't seem to dampen consumer enthusiasm for lower fruit and vegetable prices because supermarket sales fell 7.3 percent in the November 2004 through January 2005 period as consumers switched their produce shopping to open-air markets where prices are considerably lower this time of year.

Globes was reporting on figures released by Israel's Central Bureau of Statistics. Overall retail sales were flat in keeping with the seasonal pattern after increasing 4.3 percent in the August 2004 through October 2004 period. If this report seems outwardly ordinary business as usual business is anything but usual in Israel in the second month of 2005.

An analysis posted on the Website of Israel Business Information Services (I-Biz), a supplier of business intelligence and analysis, points out that the Israeli economy is beginning a rather robust recovery from a protracted recession that started in 2001 when the economy contracted -0.9 percent, according to the International Monetary Fund. The IMF says 2004 will post a 3.6 percent gain in GDP, and in 2005 will gain 3.5 percent. This after a gain of only 1.3 percent in 2003, and another contraction of -0.7 percent in 2002.

I-Biz remarks, though, that as satisfactory as they are, the GDP numbers don't tell the whole story. The firm points out that private consumption increased 9.2 percent in the final quarter of 2004. In the previous quarter it increased 3.3 percent. I-Biz said further that since private consumption is "by far" the biggest component of GDP, and because increasing private consumption numbers usually reflect consumer confidence, optimism for growth in the coming year is at a high level.

Moreover, in a posting on Israel's Ministry of Foreign Affairs Website, the Government reported that both Standard & Poor's (S&P) and Fitch have upgraded Israel's ratings on several scales.

One of the reasons that S&P gave for the upgrades was that "geopolitical risks also stabilized". Current consumption showed gains in services, clothing, and...

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