Per capita gross domestic product will increase just 0.3% this year, the lowest rise since the global recession year of 2009, according to preliminary estimates for the economy released by the Central Bureau of Statistics on Monday.
The growth in per capita GDP will ease from 1.3% last year and 1.1% in 2012, both rates far slower than in 2010 and 2011, when it climbed by 3.8% and 2.3%, respectively.
In 2009, when the world was deep in recession, the figure grew by just 0.1%.
Many economists consider per capita GDP, the rate at which the economy grows on a per-person basis, to be a good reflection of Israel’s performance and the extent to which people’s standard of living is growing, given the country’s relatively high population growth.
Overall gross domestic product will grow 2.2% this year, the statistics bureau said, down from 3.2% in 2013 and 3% in 2012.
In the first half of this year, GDP grew at a 2.5% annual rate, marking a slowdown from 3%-plus the year before.
But Operation Protective Edge — the summer’s 50-day bout of fighting with Hamas in the Gaza Strip that struck a blow to Israel’s tourism industry and depressed retail sales — weighed further on growth.
Since July, the Bank of Israel has cut its base lending rate twice, to a record low 0.25%, partly out of concerns that the economy is slowing and the government is failing to address the problem through fiscal policy. Consumer prices fell 0.3% in September, more than economists had forecast, which exacerbated concerns about the economy’s direction and weak consumer demand.
The statistics bureau customarily provides preliminary estimates for full-year economic growth in the middle of October, basing its forecast on data collected for the first seven to nine months of the year.
The bureau said Mondayit expected consumer spending to rise 3.4% for the year, a slight increase over 2013 and2012. But exports of goods and services will climb just 1.2%, marking a second slow year after an 0.9% rise in 2013. In 2012, exports rose 5.1%.
The figures would be worse if not for an 11.1% projected rise in exports of services, despite a forecast 6.7% slump in tourism receipts this year, which are classified as a service exports.
Industrial exports, which have been hurt by tepid global trade and a strong shekel, at least until the last several weeks, are expected to edge up just 0.5%, the statistics bureau said.
It predicted that investment in fixed assets would fall 0.9% in 2014 — turning around from rises of 1.1% in 2013 and 3.2% in 2012 and reflecting declines in all categories. Investment in home construction, which has slumped as builders and buyers await passage of a law exempting many buyers from the value-added tax, will drop 0.7%, the bureau said, after increases of 1.2% and 8.6% in the two previous years.
Investment in machinery and equipment, a barometer of future economic activity, will fall 0.9%, reversing an increase of 1.1% and 0.9% in the previous two years. Investment in non-residential building will drop 7.8%, it said.
Overall public spending will grow 3.7%, extending a 3.5% increase in 2013. Of that, the biggest rise — about 6.8% — will be in defense spending. Public spending on non-defense matters such as health and education will grow 2.7%, the statistics bureau predicted.