Yaakov Sheinin: Current growth unsustainable

“I do not think that another 25 or 50-basis point hike in the interest rate will affect housing prices.”

“We’re a small country and that bears a price. We’re headed for a slowdown and our joy is in vain. GDP growth of 4.7% is unsustainable,” said Economic Models CEO Yaakov Sheinin at the “Globes”-BDO Ziv Haft Finance and Capital Market Conference today.
Sheinin added, “I see the interest rate at 4.25% in 12 months. I foresee US growth and a higher interest rate.” Sheinin also warned against a 4% interest rate gap with the US.

“I do not think that another 25 or 50-basis point hike in the interest rate will affect housing prices. The housing supply must be increased, and land for 50,000 housing units must be allocated every year. Only that will stop the rise in home prices and bring down inflation to 3%. If we continue raising the interest rate, we get a massive capital inflow because investors will get 4%, which will strengthen the shekel and weaken exports.”

Published by Globes [online], Israel business news – www.globes-online.com – on May 18, 2011