In his weekly economic survey published today, the Ministry of Finance chief economist admits, "The growth rate emerging for the first half of the year is relatively weak," and adds, "Investment in residential construction was at a standstill."
At the same time, the chief economist believes that the second quarter figures indicate recovery. "Excluding the effect of diamonds, the growth rate in the second quarter was over 3%," he states. Private consumption has also resumed its expansion, mainly in durable goods (cars, refrigerators, etc.). According to revised Central Bureau of Statistics figures published last week, the economy grew only 0.6% in the first quarter and 2.7% in the second quarter. The Ministry of Finance forecasts 2.9% growth in 2017, while the Bank of Israel last month raised its growth forecast to 3.4%. The Ministry of Finance cited the high growth rates in the second half of 2016 as a possible factor in the low rate for the first quarter of this year.
"The 2.9% growth rate forecast for 2017 is still extremely relevant," the chief economist summed up. According to figures from the Central Bureau of Statistics, GDP rose by an annualized 2.1% in the first half of 2017, far below the 4.6% growth rate in the preceding six months and the 4.7% rate in the first half of 2016. An analysis of elements of GDP shows that spending on private consumption rose by a minimal 1.1%, while exports of goods and services grew 1.8%.
Investment in fixed assets and imports of goods and services, on the other hand, dropped 2.2% and 4.5%, respectively. Spending on public consumption offset the general impression with a 3% increase, reflecting rapid growth of over 7% in spending by government ministries since the beginning of the year.
The second quarter figures show clear improvement, however, with a 6.5% jump in spending on private consumption and 5.2% growth in investments in fixed assets. Exports of goods and services, on the other hand, plunged by an alarming annualized 8.8%. These figures are initial estimates, and are likely to be revised significantly at a later date.
Published by Globes [online], Israel Business News - www.globes-online.com - on August 21, 2017
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