Report: rapid economic growth continues in first quarter

In spite of the security situation, the political uncertainty and the wait for the Winograd Committee's final report, the Israeli economy showed one of the highest growth rates in the world in the first quarter, 6.3 percent on an annualized basis.

According to figures published yesterday by the Central Bureau of Statistics (CBS), rapid growth in gross domestic product (GDP) was even rosier for the business sector, 6.5 percent, in the wake of 10 percent growth in the last quarter of 2006, which followed the Second Lebanon War. The third quarter last year, when the war took place, showed a drop in GDP of 4.1 percent.

The standard of living also rose by 11.8 percent on an annualized basis, as measured by private consumption, and unemployment continued to drop by another 0.1 percent to 7.7 percent.

Private consumption is made up of two categories of goods: consumables such as food, clothing and medicine - which grew at a moderate 3.4 percent compared with 2.4 percent in the previous quarter - and durable goods such as cars and refrigerators, which surged 18.2 percent. This is a quarterly figure, which would translate into a 95.1 percent annual increase, and comes in the wake of a drop of 4.1 percent for the previous quarter.

Investments in fixed assets such as houses, or various industrial investments, rose 5.5 percent for the quarter. Housing investment dropped, but industrial investment more than made up for it. Growth in investments in industrial machinery and offices shows that industry is preparing for increased demand in the future.

Investments in fixed assets grew a whopping 23.7 percent for the quarter, while exports of goods and services climbed 11.1 percent.

Exports grew in all categories: industry - 5 percent quarterly and 21.5 percent annually, tourism - 21.9 percent quarterly and 121 percent annually, and diamonds - 14.6 percent and 72.4 percent.

Public spending dropped 4 percent, mostly as a result of decreased defense outlays.

However, the CBS warned: "These findings must be viewed cautiously because there is a high irregularity in Israeli economic statistical series."