Israel bank revises downward growth forecast

Israel's central bank published Wednesday a new growth forecast for the country in 2014, revising it downward by 0.7 percentage to 3.2 percent due to austerity measures passed by the Knesset. The new forecast was published in the Bank of Israel's Monetary Policy Report for the first half of 2013. According to the report, most of the reduction is due to the " increase in taxes and cuts in child allowance benefits" within Israel's new austerity budget. "These are expected to negatively impact demand via private consumption and to a lesser extent via investments," the bank explained. Without the austerity measures, the bank said, Israel's 11 billion U.S. dollars deficit "would have been expected to reach almost 6 percent of GDP in 2014," leading to an increase in the cost of government debt that would in turn prolong the negative impact on level of activity in the economy."