1.2% GDP growth in 2003

GDP per capita fell 0.6%, private consumption increased by 2%, and the standard of living was unchanged.

In another sign of economic recovery, GDP increased in 2003, after dropping for two years in a row. GDP grew by 1.2%, slightly more than expected, after falling 0.8% in 2002 and 0.9% in 2001.

Business product growth was higher at 1.5%, after dropping 2.8% in 2002 and 2.9% in 2001, according to preliminary estimates for 2003 published today. Growth in the old economy (excluding start-ups) was higher 2%.

Central Bureau of Statistics chief national statistician Soli Peleg said that most indicators were higher, mostly for the second half of the year. She added that the statistics showed a definite increase in activity, but stressed that the investment figures were a particular cause for concern. She also said that the work sanctions and disruptions were affecting business, and changes in the figures could only be calculated after these measures were discontinued.

Per capital GDP fell for the third straight year, amounting to a cumulative 6.6% drop. Per capital GDP rose 1.3% in Organization for Economic Co-operation and Development (OECD) countries in the same period, despite terrorist threats and recession.

Not all 2003 indicators were positive. Investment in fixed assets was down 4%, while growth-oriented investment dropped by 3.9%

The decline in residential housing construction investment continued, with a 4.1% slide: 2.5% in private construction and 12.8% in public construction. Residential housing construction has been shrinking continuously since 1998; the cumulative decrease is over 50%.

Investment in non-residential construction, which has also been waning continuously since 1998, was off 7.1%. Investment in land transportation equipment tumbled 10.5%, and has dropped by almost 40% in the past three years.

Private consumption was up 2%, after remaining unchanged in 2002. The standard of living (per capita consumption) was unchanged, after dipping 2% in 2002.

Despite talk of increased imports of consumer products, per capita imports of electrical and other durable items fell 1.8% in 2003, after declining 10.4% in 2002 and 9.7% in 2001. Imports of other items rose by only 0.3%, after falling 1% in 2002.

Exports of goods and services grew 5.5% in 2003, a positive turnaround from falls of 5.4% in 2002 and 11.7% in 2001. Exports were nevertheless affected by over three months of sanctions and disruptions, which have included the ports and customs workers.

Imports of goods and services unexpectedly dipped 2.1%, after dropping 2.3% in 2002 and 4.5% in 2001. Civilian exports were down 1.5%, after sliding 3.1% in 2002 and 5.4% in 2001.

Public spending contracted by 1% in 2003, as a result of budget cuts, following a steep rises of 5.7% in 2002, and 11.3% since the intifada began in September 2000. Civilian consumption edged up 0.7% in 2003, and has now risen 7.6% since September 2000.

Defense consumption unexpectedly declined 4.6% in 2003, following the defense budget cuts and an 11.6% drop in defense imports.

Published by Globes [online] - www.globes.co.il - on December 31, 2003

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