Economy Grew by 2.6% in 2014, While per Capita Growth Rose by Just 0.7%

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Beach goers run for cover as air raid sirens, warning of incoming rockets, sound in Tel Aviv July 8, 2014.Credit: Reuters

The economy grew by 2.6% in 2014, the Central Bureau of Statistics announced at a news conference summarizing the year, but on a per capita basis, the rate of growth was just 0.7%. That was because the country’s population grew by 1.9% in 2014. The gross domestic product per Israeli in 2014 stood at 132,500 shekels ($34,000) for the year.

Consumer spending rose by 3.8% in 2014 after a 3.3% increase in 2013. Per capita individual spending increased by 1.8%. Spending on public consumption rose by 3.8% following a 3.5% increase in 2013. Although civilian outlays in 2014 rose by 2.5%, military expenditures increased by 7.8%, presumably as a result of last summer’s 50-day war with Hamas and its allies in the Gaza Strip.

Business output, which is defined as all output excluding public and community services and housing services, rose in 2014 by 2.5%, which was below the 3.4% increase in 2013 and the 2.9% increase in 2012. Labor productivity (defined as net production per hour in the business sector) rose over the past year by just 0.6% after a 1.7% increase in 2013.

Turning to the export sector, the export of goods and services rose in 2014 by only 0.6% after a 1.5% increase in 2013 and a 0.9% increase the year before. Industrial exports excluding diamonds rose in 2014 by 2.4% following a decline the year before of 2.8%.

Foreign tourism revenues, which are considered exports of a kind, declined by 2.6% after increasing 5.2% in 2013. The tourism sector was enjoying a banner year until the fighting in July and August between Israel and Hamas. Among the other factors that hurt the sector were the economic problems in Russia, a country that has been one of the top two sources of foreign tourism to Israel, along with the United States.

Exports of services, excluding tourism and startup firms, meaning primarily software and research services, rose by 8.3%, an improvement over the 3.8% increase in 2013. Exports of diamonds declined by 5% while agricultural exports, which have also somewhat been dependent on the Russian market, were 12.8% lower in 2014.

Import of goods and services rose in 2014 by 0.9% after being essentially unchanged in 2013. When military goods and services, ships, planes and diamonds are excluded from the data, imports rose by 1.3% after declining by 2.7% in 2013.

When it comes to the government, the state registered a current deficit of 22.8 billion shekels ($5.9 billion), or 2.1% of the country’s gross domestic product, similar to the deficit a year before. Government revenues rose by 4.9% after increasing 7.7% in 2013.

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