Inflation – the main policy variable with which the Bank of Israel is entrusted – has been within the target range for a long time, which provides monetary policy the required degrees of freedom to support growth and employment in the short term, thus moderating the effects of the global slowdown which is still a restraining force on activity here as well.
From a long-term view, the Israeli economy suffers from a low rate of increase in productivity (product per hour of work). The average Israeli worker produces lower output per given work hour than his peers in most OECD countries. Not only is the increase in productivity not closing the gap with the other developed countries, the gap is growing.