as this turns out to be temporary, the turnaround in prices may lead to a turnaround in private consumption as well, and therefore in activity. a study conducted by arnon barak of the bank of israel research department, which was published this week, shows that in recent years, the main factor leading the increase in private consumption ( according to a long - term comparison estimated in the study ) is the increase in income from labor. the increase in financial asset prices and in home prices made less of a contribution than income from labor. household debt figures show that despite the increase in outstanding mortgages and consumer debt, the debt to gdp ratio and the debt to disposable income ratio increased only moderately. at the macro level, therefore, the risk is moderate. however, the rapid increase of consumer credit in recent years requires closer monitoring on the part of regulators, extra caution on the part of the public and credit providers, and an informed examination of repayment capabilities when providing or taking out credit. the interim conclusion, therefore, is that given the relatively weak state of the global economy, the growth of private consumption contributed to maintaining a strong growth rate and a robust labor market. the fact that most of the increase in consumption relies on an increase in income from labor makes it more stable, but we must be particularly attentive to the part of the increase that is supported by increased credit and asset prices. so if the economy is growing solidly, the labor market is strong, and the engine of growth is private consumption, is there something that needs to concern us? the question is whether growth that relies mainly on private consumption in a small and open economy can persist and be strong enough to reduce the gap in the standard of living relative to the other advanced economies. in this context, it is important to remember a number of facts in relation to the two main uses that have been weak in recent years : investment in the primary industries contributes not only to activity in the short term, but also to future production capacity, and investment in machinery and equipment means adopting the technologies inherent in that equipment, meaning that investment contributes to future growth by increasing production capacity and through its contribution to an increase in productivity. exports make it possible for a small and open economy to exploit its relative advantages and the economy of scale. export industries in general, and also in israel, are therefore characterized by relatively high productivity. how have investments and exports developed in recent years? investment as a share of gdp in israel is low

what happened in 2008. in some respects, there is a similarity - now, like the eve of the crisis of 2008, we are seeing negative scenarios in the global economy, but we don ’ t know if they will develop to the same level of severity as in 2008. in any case, we are refreshing the policy tools and the scenarios which we faced in 2008, but we must take into account that the next crisis, if it happens, will not be identical to the previous one, and we will need to adjust the policy response where necessary. i would like to raise two points in conclusion : the first point relates to the discussions regarding concentration. a lot is said about the people described as “ tycoons ”. it should be remembered that the “ tycoons ” are acting within the existing legal framework, and they have done nothing criminal. referring to them as bis central bankers ’ speeches people who have committed a crime is populistic – a populism which is easy in the short term, but dangerous in the long term. the second point is that the economic reality in the near future will not be simple. with that, the israeli economy is in a strong position, and we have the ability to deal with the reality which we face. it is important that we continue to take responsible policy steps as we prepare for this encounter. a happy and sweet new year! bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches