Israel: Second release confirms economy wrapped up 2017 with solid growth
March 11, 2018
A second release by the Central Bureau of Statistics (CBS) on 11 March confirmed the economy ended 2017 on a strong footing, supported by robust growth in exports and end-year fiscal stimulus. Economic growth in the fourth quarter was confirmed at a healthy 3.6% in seasonally-adjusted annualized (SAAR) terms, moderating from the third quarter (Q3: +4.0% SAAR). In addition, full-year economic growth was revised upwards to 3.4% (previously reported: +3.3%).
Household spending, which accounts for more than half of total output, slowed significantly from the third quarter and was revised downwards to a timid 1.0% (previously reported: +1.3% SAAR; Q3: +7.0% SAAR). The moderation was due largely to weaker purchases of durable goods and a fall in automobile sales. Government spending, on the other hand, was revised upwards to a steep 10.7% increase (previously reported: +9.7% SAAR), rebounding from the 2.8% contraction in the third quarter. Fixed investment was revised up but still underwhelmed, declining 4.4% in the quarter (previously reported: -5.5% SAAR; Q3: +2.6% SAAR) on flagging residential investment and a sharp drop in industrial capital spending.
Meanwhile, the external sector contributed 2.3 percentage points to overall economic growth in the quarter (previously reported: plus 2.2 percentage points; Q3: minus 2.6 percentage points), reflecting buoyant export growth and a marked slowdown of imports. Exports of goods and services grew a revised 9.9% in the fourth quarter (previously reported: +7.7% SAAR; Q3: 11.9% SAAR), while growth in imports of goods and services was also revised considerably upwards to 2.5% in the quarter (previously reported: +0.5% SAAR; Q3: +21.3% SAAR).
On an annual basis, economic growth was confirmed at 2.9% in the fourth quarter, up from the 2.2% logged in the third quarter.
Israel GDP Forecast
The Bank of Israel expects GDP growth to reach 3.4% in 2018 and 3.5% in 2019. FocusEconomics Consensus Forecast panelists expect GDP growth of 3.3% in 2018, which is unchanged from last month’s forecast. For 2019, our panelists expect the economy to expand 3.2%.
Author: Javier Colato, Economist