Israel's gross domestic product (GDP) growth slowed significantly to 3.3% on an annualized basis in the first quarter of 2010 compared with 4.8% in the fourth quarter of 2009, and 3.6% in the third quarter of 2009, the Central Bureau of Statistics reported today.

Exports fell 7.3% on an annualized basis in the first quarter of 2010 following the strengthening of the shekel against the dollar and the euro, after exports had surged 47.3% in the fourth quarter of 2009. The shekel appreciated by 1.6% against the dollar and the euro in the first quarter of 2010 compared with the fourth quarter of 2009.

The Central Bureau of Statistics also reported that personal consumption rose 1.6% in the first quarter of 2010, compared with 2.9% in the fourth quarter of 2009. Per capita consumption fell 0.2% in the first quarter of 2010, while government expenditure rose 8.2% in the first quarter.

The fall in the pace of growth provides statistical evidence for Bank of Israel concerns that Israeli exports will be hurt by the slowdown in the global economic recovery. This was the reason that the Bank of Israel left the interest rate unchanged at 1.5% at the end of the last month. The belief is that in the wake of the debt crisis in Europe, the Bank of Israel will also leave June's interest rate unchanged.

Published by Globes [online], Israel business news - www.globes-online.com - on May 16, 2010

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