Israel: Economy decelerates in Q1
May 25, 2016
In Q1 2016, GDP increased 0.8% over the previous quarter in seasonally adjusted annualized terms (SAAR). The expansion was well below the 3.1% increase tallied in the fourth quarter of last year and lowest reading in three quarters. Q1’s deceleration came on the back of a deterioration in both domestic and external demand.
In the first quarter, growth in private consumption decelerated from a 7.7% increase in Q4 to a 4.0% rise. Moreover, government consumption swung from a 12.5% increase in the fourth quarter of last year to a 1.7% decrease in Q1. Conversely, growth in fixed investment accelerated from 12.9% in Q4 to 17.3% in Q1, thus hitting the highest reading since Q3 2011.
On the external front, exports of goods and services contracted 4.4% in Q1, thus contrasting the 1.0% increase observed in the previous quarter. Moreover, growth in imports decelerated from a significant 20.9% in the fourth quarter 2015 to 7.5% in the first quarter. As a result, the external sector’s net contribution to overall economic growth improved slightly from minus 6.6 percentage points in Q4 to minus 3.9 percentage points in Q1 of this year.
In annual terms, GDP expanded 1.7% in Q4, which was down from the 2.7% expansion reported in fourth quarter of 2015.
Author: Dirina Mançellari, Senior Economist