Israel: Economy decelerates significantly in Q2
September 1, 2015
According to more detailed data, in the second quarter GDP increased 0.1% over the previous quarter in seasonally adjusted annualized terms (SAAR), which undershot the 0.3% increase reported in the first estimate. The expansion was well below the 1.8% increase tallied in the first quarter and marked the lowest reading since Q1 2009. Q2’s deceleration came mainly on the back of a slowdown in domestic demand.
In the second quarter, private consumption expanded 0.6%, which was a significant deceleration over the 5.8% increase seen in the first quarter. However, growth in government consumption held steady at Q1’s 0.4% expansion. Conversely, fixed investment contracted 3.4%, which marked a softer decrease than the previous quarter’s 8.5% drop.
On the external front, exports of goods and services contracted 10.6%, which matched the previous quarter’s drop. However, imports swung from a 3.6% expansion in Q1 to a 6.3% contraction in Q2, which marked the steepest contraction in over two years. As a result, the external sector’s net contribution to overall economic growth improved from minus 4.8 percentage points in Q1 to minus 1.3 percentage points in Q2.
In annual terms, GDP expanded 1.8% in Q2, which was down from the 2.9% expansion reported in first quarter.
Author: Dirina Mançellari, Senior Economist