The Economist estimates that Israel's gross domestic product will shrink by 1.1% this year. Previously the prestigious British weekly had predicted that Israel's GDP would grow by 0.7% in 2002.
But the magazine foresees a global economic rally lifting Israel's growth to 3% in 2003/
Despite efforts by the government to impose fiscal discipline, The Economist sees the deficit exceeding the targets set for this year and next.
Opposition to budget cuts and a drop in tax revenue will boost the deficit to 6.1% of GDP in 2002, the journal's economists calculate.
In 2003 the deficit will shrink somewhat to 4% of GDP, they predict.
A month ago The Economist predicted that Israel would end 2002 with a deficit of 5.9% of GDP.
The magazine further predicts that inflationary pressure will increase this year, but remain within reasonable bounds.