Long-Term Industry Outlook Improves

Israel's sales growth forecast for 2006 has been raised from 3.8% to 5.5%, in BMI's latest Israel Automotives Report due to a robust recovery in the car market in September and October. In the January-November period, new vehicle sales rose 6% y-o-y to 138,915 units. Israel's economy expanded robustly in H106 at 5.7% y-o-y. However, BMI has cut its 2006 growth forecast by just under one percentage point, from 4.7% to 3.8% due to the Israel-Lebanon War. The war will continue to weigh on the economy in 2007, by adding to the fiscal deficit and posing risks to tourism

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