"It is likely that there was a step up in the rate of growth in the first quarter of 2017" was the assessment of the members of the Bank of Israel Monetary Committee, as reported in the minutes of the committee's discussions on the interest rate for April released today.
On the housing market, the committee members noted the "continuing trend of cooling off in activity, against the background of the continued increase in mortgage interest rates, as seen in the prolonged decline in the size of transactions and of mortgage volumes." They also noted the high level of building starts. Nevertheless, the committee members were in agreement that it was too early to determine if there had been a turnaround in this market. "Although in the past two months the Home Price Index has been stable, in annual terms prices continue to rise at a high rate," the minutes state.
The Israeli economy grew by 4% in 2016, with the growth rate rising over the year. According to the Central Bureau of Statistics' updated estimate, released today, Israel's GDP grew at an annual rate of 6.3% in the fourth quarter of 2016, after recording a growth rate of 4.3% in the third quarter and 5.4% in the second.
The Bank of Israel Monetary Committee's optimistic estimate of further acceleration in growth is based upon the preliminary findings of the Companies Survey and on the Purchasing Managers Index. The members agreed that the economy was close to full employment, as the unemployment rate is low and wages are increasing consistently.
The committee members pointed to a broad improvement in the global economy and in world trade made as contributors to the improvement in activity, and in exports in particular. On the other hand, they registered concern that the continued appreciation of the shekel was liable to have an adverse impact on exports, and also that a possible slowdown in the rate of expansion of credit from banks might negatively impact the expansion of private consumption.
Published by Globes [online], Israel business news - www.globes-online.com - on April 20, 2017
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