Economy grows faster than thought in 2H of 2017

Israel’s economy grew more strongly in the second half of 2017 than previously thought, published data showed on Monday, and growth is expected to remain steady for the rest of 2018.

Gross domestic product grew by an annualized 4.1% in the fourth quarter of 2017 in a third estimate, faster than the 3.6% pace given in a prior estimate a month ago, the Central Bureau of Statistics said.

Much of the revision stemmed from higher private spending and a smaller decline in investment.

Third-quarter growth was revised to an annualized rate of 4.3% from 4.0%.

For all of 2017, Israel’s economy grew 3.3%.

The Bank of Israel currently estimates growth of 3.4% this year and 3.5% in 2019, although the bank is widely expected to leave short-term interest rates unchanged for at least another year due to near-zero inflation.

The statistics bureau on Sunday said Israel’s inflation rate remained at 0.2% in March, well below the government’s 1%-3% annual target.

However, policy makers have said the benign inflation is not a reflection of weak demand but rather a strong shekel and government measures to reduce the cost of living.

The central bank has also noted that the composition of growth in Israel’s economy has become more balanced, with exports rebounding on the back of stronger global trade.

In the fourth quarter, exports, which account for about 30% of Israel’s economic activity, grew 9.6% for its second straight quarterly jump.

Private consumption, another key economic driver, grew 1.7% from the third quarter, versus 1.0% in the prior estimate and 7.1% in the third quarter. Investment slipped 3.1%, while government spending soared 10.6% and imports gained 2%.

(Reuters)