“The growth figures were surprisingly weak.” Thus uttered the Governor of the Bank of Israel, Karnit Flug, in a press conference yesterday. Apparently, the economic picture in Israel has worsened faster than expected. The Bank of Israel Research Department cut its growth forecast for 2015 by 0.4% points, to 2.6%, and by 0.4% points for 2016, to 3.3%.

Surprisingly? I have been warning for nearly a year that such a situation was liable to happen, and I was not alone. The present government underperforms, when it comes to the economy. A few points are worth remembering

• The previous cabinet was effectively a lame duck at the end of its tenure, and it really did not change too much in composition when re-elected in March 2015.
• Post general election, it still took about 3 months to set up the new finance team
• The budget was delayed in passing
• There is no Parliamentary majority to pass difficult measures, such as the vital policy required for monitoring the lucrative gas industry.
• Necessary structural reforms are rumoured – tackling restrictive unions, deregulation of food imports, bulging land prices, etc – rumoured but rarely make their way into practical laws.

Flug did point out that unemployment is still encouragingly low at under 6%. And the balance of trade is poised to shift more favourably. Yet, none of this cancels out the fact that growth has slowed significantly.

Where to next? The Minister of Finance, Moshe Kahlon, has lowered corporation tax and VAT in recent weeks, as part of a series of measures to turn things around. Yes, definitely helpful. However, this is really tinkering at the edges.

The Israeli economy needs strong leadership. It is time for some fundamentals to change. Unfortunately, not enough people appear alert enough nor have the courage to take these bold decisions.