Statistics Bureau Downgrades Israel's Growth for 2012

Stats bureau lowered its estimate for the year amid growing concerns over this year's outlook.

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Israel's economy expanded by 3.1% last year, 0.2 percent less than a preliminary estimate published less than three months ago, revised figures released by the Central Bureau of Statistics Sunday showed.

While last year's growth was far higher than the average of 1.4% for the 34 member countries of the Organization for Economic Cooperation and Development, for Israel it was the second-lowest rate since 2003. During that time, the average has been about 5%. Only in 2009, the year the global economic crisis hit, did Israel see slower growth.

The bureau's downgrade for 2012 comes amid growing concerns over the outlook for this year. While the Bank of Israel expects growth of 3.8% - with one percentage point of that due to the start of gas output at the Tamar field - Europe is looking shakier after inconclusive election results in Italy.

It also marked the third year in a row of decelerating growth, following a 5% rate of expansion in 2010 and a 4.6% rate in 2011. Gross domestic product grew at a 2.6% annual rate in the first quarter of 2012, increasing to 2.8% in the second quarter, before gradually cooling to 2.7% in the third and just 2.4% in the final quarter.

On a per capita basis, the bureau's updated figures showed growth of 1.2% in 2012, down from 2.7% in 2011 and 3.1% in 2010. By that measure, Israel's economic growth last year actually lagged behind the OECD's: Based on purchasing power parity, per capita growth was just 80% of the OECD average. Government spending grew 3.4%, the highest level since 2007. Investment in fixed assets climbed 3.6%, though that followed two years of double-digit growth. Consumer spending rose 2.7%, the lowest since 2008.

Exports of goods and services barely grew at all - just 0.1% for the year, according to the bureau - following a 13.5% jump in 2010 and a 5.5% rise in 2011.

Israelis out shopping. Credit: Ofer Vaknin