GDP Expanded 3.3% Last Year in Slowest Annual Pace Since 2009

The Israeli economy grew in 2012 at its lowest rate since the economic crisis of 2009.

Moti Bassok
Moti Bassok
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Moti Bassok
Moti Bassok

The Israeli economy grew in 2012 at its lowest rate since the economic crisis of 2009, the Central Bureau of Statistics reported yesterday, citing prelimimary figures.

Israeli GDP grew only 3.3% in 2012, after two years of higher growth: 4.6% in 2011 and 5% in 2010. In 2009, which was a difficult year for the global economy, Israeli GDP grew only 1.1%.

The slowdown in economic growth will further complicate the Finance Ministry's efforts to rein in the ballooning budget deficit in 2013, and make further tax hikes and spending cuts even more necessary after the election.

Gross domestic product reached NIS 929.8 billion last year, compared with NIS 871.8 billion in 2011. Howevder, unemployment was low by international standards, 6.7%.

At a press conference in Jerusalem yesterday to sum up the data for 2012 Chief Government Statistician Prof. Shlomo Yitzhaki described Israel's economic situation as the best of any developed economy in the world, especially in light of what is happening in Europe.

The figures for 2012 were not as good as those for 2011 and 2010, and sometimes not very good at all, said Yitzhaki, who ended his tenure yesterday.

But compared to the figures for Western economies they are relatively good, he said.

In the third quarter of last year, the economy expanded by only 2.8% in annualized terms, meaning that growth would have been 2.8% had it kept up this pace for a year.

This was the lowest quarterly growth since the second quarter of 2009, which was 2%. The figures were 3.1% for the second quarter and 3.0% for the first quarter of last year.

The figures for the fourth quarter, which ended yesterday, will be released only on February 16 - after the January 22 election. They are expected to be much lower than the growth figures for the rest of last year.

As a result, the growth figure for all of 2012 may very well be revised.

Once population growth is factored in, economic growth was even slower. As the population expanded by 1.8% over the course of 2012, GDP per capita grew by only 1.5%. This figure, which equals the GDP divided by the number of people in the population, is considered a good measure of a country's standard of living.

In 2011, GDP per capita grew almost twice as much, at 2.7%. Total GDP per capita was NIS 117,600 this year, or about $30,500.

As bad as the Israeli figures might seem, they are quite respectable by global standards for last year. True, GDP growth in China is estimated at 7.5% and 4.5% in India, but the average economic growth rate for all countries belonging to the Organization for Economic Cooperation and Development, or OECD. was only 1.4% for last year.

U.S growth was 2.2% and Japan 1.6%. In Germany the figure was only 0.9% and 0.2% in France. Britain showed negative growth of 0.1%, the Spanish economy shrunk by 1.3% and the Italian economy shrunk 2.2%.

Unemployment fell in November

Other figures disappointed as well. Merchandise and services exports expanded by only 1.0%, after increasing 5.5% in 2011. Expenditure on small durable goods decreased 4.2%. One big factor in this was the 9.1% decrease in purchases of vehicles for private use.

At the same news conference, the CBS said unemployment fell from 6.9% in October to 6.7% in November. Unemployment for men was 7% in November while it fell to 6.4% for women, down from 6.8% in October.

All told, some 3.7 million Israelis were in the workforce in November, 3.4 million with jobs and 245,000 were unemployed.

The average unemployment for all OECD countries last year was 8%, though some countries had much higher numbers: In Spain unemployment hit levels of 25% and in Greece the figure was not far behind, 23.6%. Italy and France had unemployment rates of 10.6% and 9.9%.

Low unemployment was found in countries such as Norway, 3.1%; Switzerland, 3.9%; Austria and Japan, 4.4%; the Netherlands, 5.2% and Germany, 5.3%.

Prime Minister Benjamin Netanyahu put a positive spin on yesterday's economic data, focusing on the jobless rate to the exclusion of other figures.

"I welcome the continued decline in unemployment in Israel, which has been achieved thanks to responsible economic leadership in partnership with Finance Minister. Yuval Steinitz and Bank of Israel Governor Prof. Stanley Fischer," he said in a statement.

"In 2009, unemployment was higher in Israel than it was in Europe. Since then, unemployment in the Euro bloc has only risen whereas the unemployment rate in Israel has only declined. In this period, while the world was dealing with a global economic crisis, over 350,000 additional jobs were added to the Israeli economy," the prime minister said.

Per Capita economic growth since 2005