The Israeli economy is likely to grow 3.4% this year, pushing the country's gross domestic product above the NIS 1 trillion mark for the first time, the Central Bureau of Statistics said Sunday in a preliminary assessment of the economy's 2013 performance.
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The projected growth rate is exactly the same as the rate last year, and much lower than the growth rate of 4.6% in 2011 and 5.7% in 2010. Moreover, the CBS said Sunday it revised its growth figures for the first half, cutting the second-quarter pace of expansion to 4.9% from a previous estimate of 5.1%.
Still, the CBS projection is much higher than the 1.2% growth Israel experienced in 2009, the first full year after the world financial crisis.
Israel enjoyed a sharp rise in GDP in the second quarter, but analysts are doubtful whether the economy can maintain that pace. Although the start of natural gas production at the Tamar field last spring boosted output, another major factor was consumer spending, which showed a sharp and unexpected rise in the second quarter that economists say is unlikely to continue into the second half of the year.
The CBS did not say whether its growth projections included or excluded natural gas production, which is having a large impact on GDP. The Bank of Israel estimated in June that the economy would grow this year by 3.8% including natural gas production, and 2.8% without it.
Growth here far outpacing OECD
Based on international comparisons, Israel's economy is doing well. The projected average growth rate for countries belonging to the OECD (Organization for Economic Cooperation and Development) is just 1.2%. Euro bloc economies are forecast to contract by 0.6% this year. The year before, average growth for OECD countries was 1.4%, and the euro bloc contracted by 0.5%.
At a news conference in Jerusalem Sunday, Oz Shimoni, chief statistician for macroeconomic issues, said business sector GDP – which excludes housing services, government and non-profit organizations -- would expand 3.5% this year, a slight increase over 2012's 3.4%
The CBS also forecasted a 1.9% drop for 2013 in imports of goods and services, following a 2.3% increase last year. Exports of goods and services will edge up just 0.1%, with service exports increasing 9.3% but merchandise exports dropping 3.6%.
In a separate report Sunday, the CBS reported that merchandise exports – not counting ships, aircraft and diamonds - declined at a 17.3% annualized rate in the June-August period, accelerating from an 11.9% decline in March-May. Equivalent imports declined at a 1.6% rate in June-August, extending an 0.7% decline in the previous three months.
Shimoni said consumer spending will increase 4% while public consumption will rise 2.3%, with a 3.2% increase on the civilian side and a 0.3% drop in defense-related spending. The CBS also forecast that investment in fixed assets would decline 3% this year, while investment in residential construction would drop 1%.
Quality of life, defined by private consumption per capita, will increase 2.1% this year, picking up from 1.4% last year and 1.9% in 2011.