from the May 2014 issue

The OECD warns on overheating in Israel's real estate market.

The OECD has again cut its global growth forecast, and expects the global economy to grow in 2014 at a rate of 3.4%, before a slight acceleration in 2015, when the global economy is expected to grow by 3.9%.

Average Israeli income tax rate among lowest in OECD
Israel ranked 23 in OECD in purchasing power

The OECD forecasts 3.2% growth in 2014. "The growth slowdown in late 2013, attributable in part to an appreciating exchange rate and budget tightening, is expected to be only temporary. The economy will be buoyed by a gradually improving external environment, the benefit of which should be amplified by expanding gas production and persistently low interest rates.

"With growth picking up to 3.5% in 2015, unemployment should remain at a low level. Absent any inflationary strains, an accommodative monetary policy is still needed to sustain demand and moderate the impacts of currency appreciation and budget deficit reduction."

"But," the report warned, "the risks of overheating in the real estate market remain considerable. Fiscal consolidation should continue, barring a significant slowdown in activity. However, this process should rely more heavily on boosting revenue, including a streamlining and reduction of certain tax exemptions."

Reprinted from the Israel High-Tech & Investment Report May 2014

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