The Finance Ministry has published a pessimistic economic forecast for 2002, and believes that recession is almost certain to continue and unemployment to deepen.
This means that economic growth will be less than 2.4%, involving shrinking per capita GDP. The 2002 budget was based on an optimistic economic growth target of 2%.
The economists estimate that in 2002 average annual economic growth, defined as the difference between the average GDP level in 2001 and the average GDP level in 2002, will be higher than in 2001 but much lower than the multiple-year average.
The economists explain that average economic growth in 2002 will be much lower than the economic growth rate in 2002. This is because in 2001 GDP dropped each quarter in 2001, creating a very significant end effect.
The ministry expects unemployment to further deepen in 2002. In the fourth quarter of 2001 unemployment deepened to 10.2%. The economists relate this to two factors: the characteristic lag in any business cycle between decreased economic growth and deepening unemployment. In addition, the employment rate shrunk by mid-2001, but this was largely attributed to non-Israeli workers, while economists do not expect non-Israeli workers to continue accounting for this slowdown in 2002.