New shekel notes 370.
(photo credit: Courtesy Bank of Israel)
Israel’s economic output jumped an unexpected annualized 5.1 percent in the
second quarter of 2013, pulling the annualized growth for the first half of the
year up to 3.4%, the Central Bureau of Statistics reported Sunday.
major contributors to growth were a healthy level of private consumption, which
rose 6.7% in the second quarter, and government spending, which increased 8.3%.
Gross fixed capital formation, a measure of investment, dropped
Some economists have attributed the sudden spurt in growth and
consumer spending to the value-added tax.
Aware that the tax was set to
rise by one percentage point in June, consumers ran out to buy products before
the tax hit.
Indeed, in the first half of 2013, spending on durable goods
such as furniture, home appliances and cars soared 10.2%, whereas in the
previous six months it had dropped 6.6%.
Higher growth will help Finance
Minister Yair Lapid hit the deficit target for the year of 4.65% of GDP and give
him more wiggle room to make adjustments. For example, over the weekend he
announced extended tax benefits for employees working second and third shifts,
the kind of adjustments that require extra budgetary flexibility.