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Israel: Economy loses momentum in Q1

June 16, 2015

In Q1 2015, GDP increased 2.1% over the previous quarter in seasonally adjusted annualized terms (SAAR), according to more detailed data released on 16 June. The expansion was below the 2.5% increase reported in the preliminary estimate and significantly undershot the 6.5% increase tallied in the previous quarter. Q1’s deceleration came on the back of a deterioration of both the external sector and domestic demand.

In the first quarter, private consumption expanded 7.5%, which was down from the 7.9% increase tallied in the previous quarter. In addition, growth in government consumption plummeted from 6.9% in the fourth quarter to 0.8% in the first quarter. Moreover, fixed investment swung from a 9.0% increase in Q4 to a 6.5% contraction in Q1.

On the external front, exports of goods and services contracted 6.2% (Q4: +6.2% qoq SAAR). Conversely, imports expanded 11.0%, which contrasted the 0.9% contraction seen in the previous quarter. As a result, the external sector’s net contribution to overall economic growth swung from plus 2.4 percentage points in the fourth quarter to minus 5.9 percentage points in the first quarter, which marked the lowest level in over a year.

In annual terms, GDP expanded 2.3% in Q1, which was down from the 2.4% expansion reported in the preliminary estimate and was a deceleration from Q4’s 3.4% expansion.

The Central Bank expects GDP to grow 3.2% in 2015. FocusEconomics Consensus Forecast panelists foresee the economy growing 2.9% in 2015, which is unchanged from last month’s estimate. For 2016, the panel projects that the economy will expand 3.3%.


Author:, Senior Economist

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Israel GDP Q115

Note: Year-on-year changes of GDP in %.
Source: Central Bureau of Statistics (CBS) and FocusEconomics Consensus Forecast.


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