"The figures for the composition of growth in 2016 could indicate that the current growth rate is not necessarily sustainable," the Ministry of Finance chief economist states in his weekly review published today.
The chief economist warned that the "bubble" of car purchases and the upgrade of Intel's fab were among the main causes of the higher growth rate in recent quarters. Since these are one-time factors, the growth rate is liable to fall in the near future.
The third quarter GDP growth rate estimate published by the Central Bureau of Statistics last week was 3.2%, reflecting growth in all GDP elements other than exports. Private consumption (especially higher vehicle purchases) and upgrading of the Intel fab were the main factors in the accelerated growth rate.
At the same time, the chief economist notes that the rapid growth trend in private consumption slowed slightly in the third quarter, contributing "only" 1.7% to third quarter growth. "A look at the composition of growth in 2016 arouses concern that the current composition of growth is not necessarily sustainable," the Ministry of Finance emphasizes, adding, "The relative slowdown in private consumption in the third quarter could indicate that some of the reasons for the growth in private consumption in recent quarters are short-lived."
Published by Globes [online], Israel business news - www.globes-online.com - on November 20, 2016
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