Israel’s economy grew at a 1.7% rate in the first quarter, the Central Bureau of Statistics reported Sunday, raising its estimate for a second time since its preliminary figure.
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The pace of growth remains slow but the latest revisions puts the rate at more than double the 0.8% rate the CBS had originally estimated and will ensure that the treasury can move forward with the 2017-18 budget with greater confidence, on the assumption that the economy will meet its targeted growth rate of 2.8% for the year.
The CBS said on Sunday economic growth was boosted by consumer spending and by investment in fixed assets, which grew at annual rates of 5% and 14.6%, respectively. But perhaps the most interesting figure was for exports of goods and services, whose sharp preliminary declines had set off alarm bells about the health of Israeli industry.
However, the latest CBS figures showed that, not counting polished diamonds and startup companies, exports declined by just a 5.3% rate in the first quarter – a far smaller drop than the 12.9% rate first reported in May and the 8% revised estimate a month ago.
Moreover, exports of services – a category that includes everything from computer software to incoming tourism – rose at a heady 25.9% rate, a complete about-face from a 14.2% annualized decline the CBS reported in May after the CBS adopted new standards for measuring the figure.
The good news from the CBS came as the cabinet voted unanimously to adopt a two-year budget for 2017-18. Ministers didn’t address any of the budget’s components, just the principle that it would cover two years instead of the usual one.
The government asked the Knesset Finance Committee to debate the proposal quickly and approve it for its interim votes already today. The treasury’s goal is to have the final vote before the lawmakers’ summer recess at the start of August.
The two-year budget gives the treasury a window to adjust fiscal policy to changing economic conditions and avoid what happened in 2011-12, when the government was faced with a giant 39 billion-shekel deficit.
The proposed law says that if spending or revenues differ significantly from budget projections at the end of 2017, the treasury can amend it for the following year. The Knesset must approve any changes. If it fails to do so by March 29, 2018, the government must call new elections.