Israel: Economy cools in Q3
November 16, 2016
In Q3 2016, GDP increased 3.2% over the previous quarter in seasonally adjusted annualized terms (SAAR). The preliminary estimate published by the Central Bureau of Statistics (CBS) showed that the third quarter’s growth was substantially below the 4.9% expansion registered in the second quarter, but it still overshot market analysts’ forecast of 3.0% growth. The economy decelerated due to a hefty slowdown in private and government consumption and a dip in exports.
In the third quarter, private consumption growth slowed to a 2.9% increase after having surged 9.3% in Q2. According to the CBS, household consumption of durable goods per capita collapsed. Moreover, government consumption decreased from an 8.1% increase in the second quarter to a 2.9% expansion in Q3. Conversely, growth in fixed investment accelerated from 7.1% in Q2 to 12.2% in Q3 thanks to a strong acceleration of fixed investment in the industrial sector.
On the external front, goods and services exports fell 4.7% in Q3, which was a severe downswing from the 9.2% increase observed in Q2 and the lowest print in five quarters. Imports expanded 5.8%, which was well below Q2’s 21.8% surge. As a result, the external sector’s net contribution to overall economic growth improved from minus 4.1 percentage points in Q2 of this year to minus 3.3 percentage points in Q3.
In annual terms, GDP expanded 5.0% in Q3, which was up from the 3.0% expansion reported in the second quarter and the best result seen since Q1 2014.