Finance Minister Shimon Peres on Sunday unveiled an economic recovery plan aimed at reducing inflation by cutting wages and spending for defense, health and welfare.

Peres said at a news conference he plans to stimulate growth in Israel's economy by pumping money into flagging industries and liberalizing investment regulations.The proposed budget cut is 1 billion shekels, or about $600 million, Peres said. The government adopted a $31 billion budget for 1988.

About a quarter of the cuts will come out of defense spending, putting at risk the jobs of up to 4,000 defense industry employees, Israeli news reports said.

Peres said his long-range aim is to reduce unemployment, which he said hit 7 percent because of a lack of economic growth in the past year.

The plan was the most sweeping economic program introduced since a July 1985 program curbed annual inflation of 440 percent down to a current level of about 20 percent a year.

Peres said he wants to reduce inflation to a single-digit figure by year's end.

"We must reach a European level of inflation to survive," he said, but did not give a specific target figure.

"Stability is endangered and we are liable to sink into a deep recession with continuing inflation. . . . Our economy needs these measures like a breath of fresh air."

Prime Minister Yitzhak Shamir said he supports the new program.

"I hope it will be accepted and implemented," Shamir said on Israel radio, adding that he hoped "the budget cuts would not hurt too much."

The government's figures for last year reflect zero growth in production and gross national product and a drop in exports and tourism.