Israel's Economic Growth in 2010 Bests Forecasts

Local economy expands by 4.5%, surpassing OECD average of 2.7%.

Israel's economy did better than expected, expanding by 4.5% this year, according to preliminary estimates. The average among the OECD nations is reportedly 2.7%.

While living standards apparently contracted in most of the West, here an index tracking the standard of living increased by 2.7% in 2010, officials from the Central Bureau of Statistics stated at a press conference yesterday.

Israeli economy grows

The bureau's figures do not include data for December. Its estimates extrapolate data from the first nine to 11 months of the year (depending on the data series ), in other words - they are an educated guess. The final figures could be different but should be in the same ballpark.

In 2009 the Israeli economy expanded by just 0.9% and in 2008, by 4.2%.

The International Monetary Fund recently estimated that the economy would grow by 4.2%, while the Organization of Economic Cooperation and Development (which Israel joined in mid-year ) predicted growth of 3.9% for Israel's economy this year.

The Finance Ministry had been even sourer, forecasting growth of 3.6%.

The Bank of Israel had been in the middle of that range, with an estimate of 4.0%. In other words, if the stats bureau's estimate is on the money, everybody erred on the downside.

The statistics bureau itself projected just two months ago that Israel's economic growth wouldn't pass 4.1% this year.

Seen from another angle, though, the figure makes sense. Tax collection exceeded preliminary estimates for the year by NIS 12 billion. The faster-than-expected pace of economic growth explains the "surplus" collection.

Looking back, Israel's economy began to ramp up from the shock of the global economy in the second quarter of 2009. Since then, the quarterly pace of growth has been in the range of 4% to 5% in annualized terms. In the third quarter of 2010, the economy grew at a pace of 4.4% when extrapolated to the whole 12 months of the year.

While Israel's figure is impressive compared with the other OECD nations, it was far outpaced by some emerging economies. India apparently achieved economic growth of 9.9% this year and Brazil, 7.5%. The U.S. economy apparently expanded by 2.7% and Germany's by 3.5%. Spain's contracted by 0.2% and Ireland's by 0.3%.

Note however that all the growth statistics, for Israel and the rest of the world, are subject to change once the final data for December is in.