JERUSALEM, June 15 (Xinhua) -- A report issued on Thursday by the International Monetary Fund cautioned that the uncertainty caused by the Israeli government-proposed judicial reform could prompt Israeli hi-tech companies to relocate abroad.
The report said that if a large enough number of hi-tech firms relocate, Israel's strong economic growth potential could be jeopardized, as the capital stock and labor market productivity could be permanently damaged.
It added that without a durable and politically sustainable solution, the high levels of uncertainty could significantly increase the price of risk in the economy. Consequently, financial conditions would be tightened and consumption and investment ultimately slowed.
It also noted that the investment could be affected by the relocation of hi-tech firms which conduct cross-border activities, rely on international financing, and employ skilled and internationally mobile workers.
The report expected Israel's economic growth to slow to about 2.5 percent this year as households purchasing power moderates and firms rein in investment. ■
