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The Israeli economy is definitely slowing down. Economic growth between July and September reached only 2.3% in annual terms - far below the 4.1% reported for the second quarter and 5.2% for the first, and for all of 2007 for that matter. Growth in the quarter, however, was quite a bit higher than that expected in the near future, when the economy is expected to really start feeling the impact of the world financial and economic crisis.

Private sector production rose just 1.9% in the third quarter after gaining 5.0% and 5.8% in the first and second quarters respectively.

The preliminary estimates for the period released by the Central Bureau of Statistics yesterday point to a slowing or even shrinking economy in most areas.

Investment was down 16.5%, and exports of goods and services shrank 13.4%. (These had fallen 2.1% in the second quarter after gaining 13.2% in the first.)

Imports are declining as well. Services and goods from overseas sank 7.0%, and private spending on consumption shrank 2.9%.

The figures show that manufacturing exports sank as well in the quarter, down 9.9%. Although diamond exports were down a whopping 57.5% and tourism services plunged 45.4%, agricultural exports gained 35.9% in the three-month period.

Gross domestic capital formation was down 0.8%, after easing 0.9% in the second quarter and increasing 7.4% in the first quarter.

Investments in fixed assets such as buildings, machinery and equipment, and vehicles, tumbled 15%.