Consumption in Israel

Israel - Consumption

GDP growth moderates in the third quarter

Economic growth slowed in the third quarter, with GDP increasing 2.1% in seasonally-adjusted annualized terms (SAAR) (Q2: +7.3% SAAR).

Private consumption fell 1.7% in the third quarter, which contrasted the second quarter's 9.3% expansion. Government consumption improved to a 6.5% expansion in Q3 (Q2: +2.4% SAAR). Meanwhile, fixed investment growth improved to 13.0% in Q3, from the 7.3% increase recorded in the previous quarter.

On the external front, exports of goods and services increased 3.8% on a SAAR basis in the third quarter, which was below the second quarter's 19.3% expansion. Conversely, imports of goods and services growth picked up to 4.9% in Q3 (Q2: +3.0% SAAR).

On an annual basis, economic growth picked up to 7.6% in Q3, compared to the previous quarter's 5.1% expansion.

Q3’s strong GDP reading suggests that annual GDP growth for 2022 as a whole will be close to 6%, which would be well over double our forecast for major advanced economies. Next year, the Consensus is for the economy to avoid recession, aided by rapid population growth, a likely supportive fiscal stance, growing trade ties with Arab neighbors and rising gas production.

On the outlook, the EIU said:

“With a new government likely to take office soon and relatively comfortable fiscal finances, there is likely to be a substantial government injection to support the economy. […] We continue to project a further slowdown in the fourth quarter of 2022 and early in 2023, but we do not expect a recession, given strong fundamentals and scope for supportive fiscal tools.”

FocusEconomics analysts see the economy expanding 3.2% in 2023, which is down 0.2 percentage points from last month’s forecast, before growing 3.4% in 2024.