Israel: Economic momentum ebbs in 2019 but stays solid
December 31, 2019
According to preliminary data published on 31 December, the economy expanded 3.3% in 2019, broadly in line with FocusEconomics’ panelists forecast of 3.2% growth but down from the 3.4% expansion observed in 2018. 2019’s reading also marked the third consecutive annual deceleration in economic growth, with the economy knocked by weaker external momentum and domestic political uncertainty.
Private consumption picked up pace somewhat (2019: +3.9% year-on-year; 2018: +3.7% year-on-year), supported by low unemployment, weak price pressures and solid wage gains. Public consumption was also up (2019: +4.1% yoy; 2018: +4.0% yoy), as the government maintained a loose fiscal stance, although fixed investment growth petered out (2019: +0.3% yoy; 2018: +4.8% yoy), likely impacted somewhat by domestic political gridlock.
On the external front, export growth slowed to 3.3% (2018: +5.6% yoy) amid slower global economic momentum and trade tensions, while growth in imports decelerated to 3.4% (2018: +6.4% yoy).
In 2020, panelists see growth broadly stable, buttressed by loose monetary policy and greater energy exports as production from the Leviathan gas field ramps up. However, ongoing political paralysis will hamper domestic policymaking.
Author: Oliver Reynolds, Economist