Israel faces freeze in economic growth
Initial Central Bureau of Statistics estimate reveals economy expected to grow 3.4% in 2013, lower than estimates but still significantly higher than growth in developed countries. Investments in housing construction to drop 1%
The Israeli economy will grow 3.4% in 2013, according to an initial estimate published Monday by the Central Bureau of Statistics (CBS). This growth rate is similar to the one recorded in 2012 and is lower than forecasts posted by the Bank of Israel
(3.8%) and Finance Ministry (3.5%).
The growth rate reflects the increase in gross domestic product between this year and last year, although CBS recently changed the way it calculates the GDP.
Investments in fixed assets fell 2.4% this year, for the first time since the 2009 global crisis. Investments in housing construction will go down by 1%, while investments in the different economic industries will drop 3%.
Fiscal Policy
Senior Finance Ministry source says 2013 deficit will likely be narrower than expected due in part to changes in way Israel calculates economic output
As a result of the change, GDP grew in 2012 to a level of NIS 996 billion (about $283 billion), and according to the initial estimate it will reach a level of NIS 1.05 trillion ($300 billion) by the end of the year.
According to the CBS figures, the Israeli economy maintains its position in the global economy, with a significantly higher growth rate than other developed countries. The average growth rate in OECD countries is expected to stand at 1.2% in the coming year, while the eurozone is expecting a negative growth of 0.6%.
Nonetheless, the growth figures for this year reflect a substantial change in the sources of growth in the Israeli economy. While in previous years exports and investments in fixed assets were considered the main sources of growth,
this year private consumption appears to be contributing to economic growth.
While the export of goods and services recorded an insignificant growth, and the investment in fixed assets saw a 2.4% drop, private consumption was up 4% and public consumption went up 2.3%.
CBS also updated the growth rate for the second quarter of the year from 5.1% to 4.9%.
