Israel Economy Grew Slower Than First Estimates After Gaza War, Government Says

Central Bureau of Statistics says GDP grew at 2.3% annual rate in 2014's second half, down from most recent estimate of 2.6%.

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Haifa port. A  decline in exports helped drive down the GDP in the second half of 2013.
Haifa port.Credit: Bloomberg

In its third revision of second-half 2014 economic data, the Central Bureau of Statistics said on Thursday the Israeli economy grew somewhat more slowly after last summer’s Gaza war than it had originally estimated.

The CBS said gross domestic product grew at a 2.3% annual rate in the second half of the year, down from an estimate five weeks ago of 2.6%. In the fourth quarter, after Operation Protective Edge, GDP rebounded from its wartime slowdown but somewhat less so than originally estimated: GDP jumped at a 7% annualized rate, instead of 7.2%.

Growth in the second half was paced by a 6.1% annualized increase in consumer spending and a 6.4% rise in public spending. Exports, however, showed no growth and investment in machinery and equipment declined at a 0.4% rate, the CBS said. Imports rose at a 5.1% rate.

The latest 2014 figures confirmed that the war did not push Israel into a recession as many had feared at the time. GDP actually grew during the third quarter when Israel fought a 50-day war with Hamas in the Gaza Strip, causing stores and factories to close and sending tourists packing.

The buoyant economy has been boosting Israeli government tax revenues, which grew 11% in March. That should make things easier for Moshe Kahlon, the finance minster-designate, when he begins work on the 2015 budget, which never cleared the Knesset before the last government dispersed in December.

The Bank of Israel said at the end of last month it expected GDP to grow this year by 3.2%, unchanged from its previous forecast, and in 2016 it is expected to accelerate to 3.5%, revising its prediction upward from a previous 3%.

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