Israel’s gross domestic product (GDP) grew at an annual rate of 3% in the second quarter of this year, the Central Bureau of Statistics reported today. The growth rate matches the annual forecast by the Bank of Israel, and is slightly higher than the estimate by the Ministry of Finance that economic growth would be 2.7% this year. The OECD’s current forecast for economic growth in Israel this year is 2.9%.
The annualized growth rate in the first quarter was higher, at 4.2%.
Taking into account the growth in Israel’s population, the economy is growing at about 1% annually. GDP per capita grew an at annual rate of 1.1% in the second quarter, as did private consumption.
How are inflation and rising interest rates affecting Israelis’ consumption habits? A breakdown of spending by the public shows that day-today private consumption, which includes spending on such items as food, housing, fuel, and power, actually fell by 0.6% in the second quarter.
Spending on less routine or vital products, such as fashion and footwear, leisure and entertainment, and personal items, fell substantially, by 11.2%. Spending on vehicles for private use declined even more sharply, by 14.5% on an annual basis.
The Central Bureau of Statistics appended an international comparison for the change in GDP between the first and second quarters. With quarterly growth of 0.7%, Israel is in a respectable position. The US, for example, recorded quarterly growth of 0.6%. In Britain, growth was 0.2%; Germany recorded no growth at all; while Austria’s economy shrank by 0.4%. The table is led by Lithuania, with a sharp quarterly jump in GDP of 2.8%.
The figures released by the Central Bureau of Statistics also reflect the weakness in Israel’s technology industry, which is suffering from a steep decline in investment. Investment in machinery and equipment in the information technology and communications industries fell by an annualized 19.4% in the quarter.
Published by Globes, Israel business news - en.globes.co.il - on August 16, 2023.
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