The government is meeting now (Thursday) to approve the state budget, and therefore the forecasts of the chief economist at the Ministry of Finance, Shira Greenberg, and the risk assessments regarding the coming years have been attached.
The Chief Economist at the Ministry of Finance, Shira Greenberg, estimates that "to the extent that the legal reform is perceived by the market as harming the strength and independence of state institutions and increasing the uncertainty in the investment environment, this may harm economic activity in the economy and in particular private investments." -2027 and which was distributed together with the state budget proposal for the years 2023-2024 in preparation for today's government discussion.
The Chief Economist at the Treasury, Shira Greenberg,
"Studies in the economic literature have found a positive relationship between the strength and independence of state institutions and economic growth, the scope of private investments, and in particular the scope of foreign direct investments and more. Also, the credit rating companies may refer to these developments," writes the chief economist.
Beyond that, Greenberg refers to the state's income from taxes and estimates that these should drop in 2023 at a nominal rate of 0.3%, which means a real decrease of 3.5%.
This, against the background of the increase in inflation and interest in the economy which will lead to a decrease in growth.
"However, when examining the multi-year trend, the forecast is still above the trend line," she writes and adds: "Risk factors during the forecast period require an examination of risks that could lead to a deviation from the forecast."
Among the risks that may cloud the forecasts, Greenberg mentions, among others, the war between Russia and Ukraine, an increase in inflation and an economic recession, geopolitical events as well as the economic effects of the reform of the judicial system.
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