Israel: Economy decelerates in Q1
May 18, 2015
In Q1 2015, GDP increased 2.5% over the previous quarter in seasonally adjusted annualized terms (SAAR). The expansion was well below Q4’s revised 6.6% increase (previously reported: +7.0% quarter-on-quarter SAAR). The deceleration in the first quarter mainly came on the back of a contraction in the external sector.
Private consumption expanded 5.5% in Q1, which was down from the 7.0% growth recorded in the previous quarter. In addition, growth in government consumption slowed from 6.9% in Q4 to a weak 0.7% in Q1, which marked the slowest expansion since Q4 2013. Fixed investment contracted 5.8% in the first quarter, which contrasted the 9.2% expansion tallied in the fourth quarter of last year.
On the external front, exports of good as services expanded 3.1% in Q1, which was a significant slowdown over the 10.2% increase observed in the previous quarter. On the contrary, imports expanded 7.1%, which contrasted the 2.2% contraction seen in Q4. As a result, the external sector’s net contribution to overall economic growth deteriorated from plus 4.2 percentage points in the fourth quarter to minus 1.4 percentage points in the first quarter.
In annual terms, GDP expanded 2.4% in Q1, which was a deceleration over the 3.4% increase seen in the previous quarter.
Author: Dirina Mançellari, Senior Economist