Israel: First estimate for 2016 growth shows strong annual expansion, Q3 deceleration confirmed
December 29, 2016
The Israeli economy picked up steam in 2016, growing 3.8% year-on-year, according to a preliminary estimate published by the Central Bureau of Statistics (CBS) (2015: +2.5% yoy). Israel’s GDP was buttressed by soaring private consumption and healthy fixed investment on the back of accommodative fiscal and monetary policy.
Domestic demand was the main driver of growth in 2016. Private consumption increased 6.1%, up from 4.3% in the previous year, fueled in particular by easy access to credit for households. Government consumption started with a contraction in Q1 2016 but swung up thereafter and expanded 3.8% overall last year (2015: +3.3% yoy). Consistently low interest rates also boosted fixed investment, which rose a remarkable 11.0% after two years of flat growth.
On the external front, the performance was less encouraging, despite a rebound in exports of goods and services. Exports increased 3.0% last year, up from a 4.3% contraction in 2015. Imports of goods and services rebounded steeply from a 0.5% decline in 2015 to a 9.2% rise, supported by the appreciation of the shekel against both the dollar and the euro. As a result, the external sector’s net contribution to overall economic growth deteriorated from minus 1.3 percentage points to minus 2.0 percentage points.
Although the CBS reported a preliminary estimate for 2016 growth, data for Q4 2016 has not been published yet.