Israel: Economic growth remains robust in the first quarter of the year
May 16, 2018
According to preliminary data released by the Central Bureau of Statistics (CBS) on 16 May, the Israeli economy grew a robust 4.2% quarter-on-quarter at a seasonally-adjusted annualized rate (SAAR). Although the result came in slightly below the prior quarter’s revised print of 4.4% (previously reported: +4.1% quarter-on-quarter SAAR), it was driven by a strong increase in domestic demand, while the external sector’s performance worsened.
Private consumption growth quadrupled in the quarter, logging impressive 10.0% growth (Q4 2017: +2.5% qoq SAAR). The strong reading benefitted notably from a massive jump in durable goods consumption, while expenditure on semi-durable goods also rebounded in the quarter. Fixed investment recorded a noticeable turnaround, growing 20.3% and contrasting the -0.3% contraction witnessed in the prior quarter. This was due to stronger investment in industries, as investment in residential buildings contracted for the fourth consecutive quarter. Government expenditure growth, meanwhile, slowed marginally but remained strong (Q1 2018: +11.3% qoq SAAR; Q4 2017: +11.9% qoq SAAR).
On the external front, export growth eased from a strong 10.3% increase in Q4 (previously reported: +9.9% qoq SAAR) to 7.2% in Q1. Imports expanded at a stronger pace, increasing 23.1%, which was up from the prior quarter’s 6.1% increase (previously reported: +2.5% qoq SAAR).
On an annual basis, economic growth picked up considerable speed and reached 3.9%, up markedly from the prior quarter’s 3.0%.
Israel GDP Forecast
The Bank of Israel expects GDP growth to reach 3.4% in 2018 and 3.5% in 2019. FocusEconomics Consensus Forecast panelists expect GDP growth of 3.4% in 2018, which is unchanged from last month’s forecast. For 2019, our panelists expect the economy to expand 3.3%.
Author: Jan Lammersen, Economist