Israel's 2014 growth lowest in 5 years

Protective Edge had less of an effect than first thought.

By
December 31, 2014 21:10
1 minute read.
money

Shekel money bills. (photo credit: REUTERS)

The economy grew 2.6 percent in 2014, its lowest growth rate since 2009, when the global financial crisis hit economies around the world and Israel’s GDP grew just 1.9%.

Though tepid, the economy still expanded more than the OECD average of 1.8% and the US rate of 2.2%, but less than the UK’s 3% . The population grew faster than many advanced countries, meaning the economic growth per person was less impressive: 0.7% in Israel versus 1.3% in the OECD and 1.2% in the US.

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The unemployment rate remained relatively low, at 5.9% for the year, next to the 7.5% still prevalent in the OECD.

Updates on Q3 stats showed Operation Protective Edge had less of an effect than originally thought. Though first estimates found the economy contracted by 0.4% in Q3, when the war occurred, the estimate was revised to a 0.1% contraction.

Similarly, while the war was expected to shave 0.6% of the country’s annual economic growth, the Bank of Israel estimated this week that it only cost the economy 0.3%. There may be a bump in growth ahead as Israel bounces back from the war. BoI forecasts the economy will grow 3.2% in 2015.

Meretz chairwoman Zehava Gal-On called the figures a “badge of shame,” and blamed the prime minister and ousted finance minister Yair Lapid for the slowed growth, saying they did nothing to address poverty, the cost of living and increasing wealth concentration.

“The working middle class and the weak classes, who as always will be the first to pay the price, should demand an answer at the ballot box.”

In regards to the cost of housing, a persistent economic problem, the first 11 months of 2014 saw few results. The Central Bureau of Statistics said there was a 14.4% drop in the number of apartments sold in comparison with the same period in 2013.

This may be due to Lapid’s 0-VAT plan, which promised a discount to some consumers, but it never went through.


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