Economy Grows at 3% in First Half of Year, in Pleasant Surprise to Analysts

High-tech sector's output jumps 11.5% in second quarter of 2012.

The economy grew by 3% in the first half of the year, on an annualized basis, and by 3.2% in the second quarter, the Central Bureau of Statistics announced yesterday. The news came as a pleasant surprise to the economic stewards at the Finance Ministry and the Bank of Israel.

The growth in the country's gross domestic product for the first half of the year was higher than most analysts had expected, but it remained lower than the comparable period last year, when the economy expanded by 5.1%. The 3.2% second-quarter growth figure reflects a 10.3% increase in the export of goods and services, a 5.4% rise in private consumption and a 1.8% rise in public consumption, partly offset by a 1.1% decline in fixed assets.

In another gauge of the country's economic situation, the Bank of Israel's Composite State-of-the-Economy index rose by 0.2% in July, the central bank disclosed yesterday. The number reflects continued stable growth at a rate similar to that in the first half of the year. But the rate is lower than it was last year, the bank noted.

This index is one of the major measures considered by the central bank when it sets interest rates.

According to the statistics bureau, industrial production in the second quarter rose by 2.1% in annualized terms, after declining 0.9% in the first quarter. The high-tech sector's output increased by 11.5% in annual terms, after expanding just 1.1% in the first quarter of the year.

Private consumption rose by 4.4% in the first half, following a rise of just 1.2% in the second half of last year, but a 4.9% increase in the first half of 2011. Per capita consumption figures, which are one measure of a country's standard of living, rose by 2.6% in annualized terms during the first half of this year, after declining by 0.6% in the second half of last year. During the first half of last year, per capita consumption rose by 3%.

It's worth noting that the second half of 2011 marked the height of the popular protests over the cost of living.

Private per capita consumption of durable goods, such as furniture, appliances and private cars, increased by 5% from January through June of this year, the statistics bureau reported. With regard to other private consumption, the agency reported that spending on clothes, shoes and other personal items rose by 6.9%.

The measure of total resources available to the economy, including imports and local production, posted an increase of 5.8% in annualized terms.