The International Monetary Fund said Monday that Israel is unlikely to see an economic downturn in 2012, but the international body urged the government to focus on cutting public debt. Among the Fund’s recommendations in its annual report were that Israel curb defense spending.

The IMF noted that the country’s economic stability in the long run “will remain in question” unless a larger percentage of Israeli Arabs and Orthodox Jews join the work force.

The Fund said Monday it expects Israel’s economy to grow slightly less than three percent in 2012, with growth accelerating to 3.75 percent in 2013.

Meanwhile, the Bank of Israel said last summer’s wave of social protests have contributed to lowering the inflation rate.

In a report issued Sunday, the bank noted and detailed a drop in the Consumer Price Index (CPI) in the second half of 2011.

Yedioth Ahronoth reported that food prices, with the exception of fruits and vegetables, dropped by 8.1% in the third quarter of last year. Dairy products were affected most, with prices falling about 20% in the same period.