The economy has not featured as a significant factor in Tuesday’s election, in spite of the country’s deteriorating economic outlook.

The central bank last month projected a 0.2 per cent economic decline this year – a prediction some economists called optimistic - revising its estimate from 1.5 per cent growth.

About 17,500 people were laid off in December, the highest one-month job loss in several decades. The figure was especially worrying because it included a large rise in job cuts in the high-tech industry, viewed as the economy’s growth engine.

“The economy is far behind in the political agenda. We just had a war and it’s not clear if it ended, so everyone is asking themselves who the next leader should be to deal with the country’s security threats,” said Ytzhak Katz, chief executive of Israeli polling company Maagar Mochot.

Indeed, analysts say the issue of national security – typically a major worry for Israeli voters – was made even more important by the 22-day onslaught in the Gaza Strip. Many Israelis believe the military campaign did not go far enough in curbing arms-smuggling into Gaza by the Islamist group Hamas or ending cross-border rocket fire against southern Israeli towns.

While economic issues are not at the top of the election agenda, the issue is nevertheless expected to give an edge to Benjamin Netanyahu, a former prime minister and head of the opposition right-wing Likud party, the frontrunner in Tuesday’s race.

Mr Netanyahu, who served as finance minister from 2003 to 2005, “is considered more knowledgeable and experienced than Tzipi Livni or Ehud Barak on the economy,” said Ephraim Yaar, a pollster at Tel Aviv University.

Ms Livni is the head of the ruling centrist Kadima party, which is running a close second in the polls, and Mr Barak is leader of the centre-left Labour party, which is lagging far behind Likud and Kadima.

Mr Netanyahu, a 59-year-old who served in one of the Israeli military’s most elite special forces units, flaunts his experience with his party’s main campaign slogan: “Strong on security, strong on the economy.”

As finance minister, Mr Netanyahu – dubbed by one Israeli commentator the “prophet of capitalism in Israel” - won plaudits from investors and entrepreneurs for ushering in free-market reforms with tax cuts, capital market restructuring and privatisation. However, he also drew criticism for slashing welfare payments that some blamed for increasing poverty and widening social gaps.

Mr Netanyahu has now cast himself as the man who will navigate Israel’s economy through the global crisis, and much of the business community favours his plans over those of rival candidates.

He aims to lower taxes for individuals and companies; boost the real estate market with a massive privatisation of state-owned land and slashing of red tape; invest in infrastructure projects such as highways and long-distance trains; make government guarantees available to banks to encourage them to provide loans; and increase state funds to technology start-ups.

However, Mr Netanyahu’s economic platform may not be enough to draw the votes of many business executives who don’t share his hawkish political views, including a reluctance to engage in talks with the Palestinians on a two-state solution.

“The business community is mostly in the centre and left” of Israeli politics, said Hagai Golan, editor in chief of the Israeli business daily Globes. “When these people go to vote, they’ll vote according to their political views.”

Elisha Yanay, chief executive of Motorola Israel, said in an interview that Mr Netanyahu “is too right-wing in his political vision but in the economic arena he is very good.” While declining to say which candidate he will vote for, Mr Yanay added: “I have doubts about his views on politics, the military and relations with other countries and I am concerned about that.”

Eli Hurvitz, chairman of Israel’s Teva, the world’s biggest maker of generic drugs, said Likud’s popularity in the polls suggests that even if Mr Netanyahu doesn’t win the premiership, he’s likely to gain the economic leadership in any government coalition.

“If he becomes prime minister, he will influence economics much more than anybody else,” Mr Hurvitz said. “And if he won’t be the prime minister, he will in any case become the finance minister.”

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