Treasury: Economic Growth Is Back

Israeli economic growth is picking up speed again. Following contraction in the first quarter of the year, growth returned in the second quarter - and gained momentum in the third.

Israel's gross domestic product increased by an annualized 2.2% in the third quarter of 2009, more than double the roughly 1% calculated for GDP growth in the second quarter, said the Central Bureau of Statistics yesterday.

In the first quarter of 2009, GDP contracted by 3.2%.

The third-quarter figure is preliminary, and could be adjusted later. Meanwhile, the quarterly figures are adjusted for inflation and seasonal changes. The main driver behind third-quarter growth was export of goods and services, and investment in fixed assets. Also, the public simply spent more - consumer spending rose in general, including on durable goods.

In the third quarter, the Central Bureau of Statistics figures show that consumer spending on durable goods (such as refrigerators) increased by 10.9% per capita in quarterly terms, which translates into 51.5% in annualized terms. In the previous quarter, spending on durables had increased by 4.6% in quarterly terms, or 19.6% in annualized terms.

In other news from the Central Bureau of Statistics, Israel's debt to GDP ratio, one of the most important parameters of economic strength, will remain 78% in 2009. Israel's GDP last year had been thought to amount to NIS 714 billion, but last week the Bureau recalculated that to NIS 725 million, based on the latest information. Since Israel's debt in 2008 had been NIS 557 billion, ergo - the debt to GDP ratio last year had been 78%. And there it will stay this year.