Trade deficit narrows in December as imports decline

Israel’s trade deficit narrowed in December as imports declined and exports rose, the Central Bureau of Statistics reported Thursday.

The deficit, excluding polished diamonds, ships and aircraft, narrowed to a seasonally adjusted $1.25 billion, from a revised $1.54b. the previous month, the statistics bureau said. For the year, the deficit rose 87 percent to $15.9b.

“Going forward, exports will probably expand slightly more than imports,” Jonathan Katz, a Jerusalem-based economist for HSBC Holdings Plc, said prior to the press release. “This is partly due to the huge expansion of the Intel Corp. plant in Kiryat Gat. It’s a major macro story.”

Israel’s economy grew 4.8% in 2011, close to the government’s expectations and similar to the previous year.

Exports of goods and services advanced 4.5% in 2011, after gaining 13.4% in 2010, the bureau reported December 29.

Imports declined 4.9% to $5.1b. in December, while exports rose 0.8% to $3.8b. Imports of investment goods declined, while imports of raw materials and consumer goods increased.

Imports of machinery and equipment increased in 2011 as the Intel plant was built, and they are likely to decline in 2012 on completion of the plan, Katz said. Intel Corp.’s Israel unit said a year ago that it would invest $2.7b. on the upgrade.

(Bloomberg)