Growth slows in March-May period

Central Bureau of Statistics: economic indicators point to a slowdown in the pace of growth for the March-to-May period, particular in the growth of exports of goods.

July 1, 2010 11:01
2 minute read.
Haifa port

haifa port 311. (photo credit: Ariel Jerozolimski)


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Economic growth slowed in March through May, led by a downturn in exports, while the number of hotel stays increased, the Central Bureau of Statistics reported Wednesday.

“The majority of main economic indicators for the March-to-May period point to a slowdown in the pace of growth, in particular in the growth of exports of goods,” the quarterly report said. “In the months March to May, exports of goods, not including defense, ships, planes and diamonds, grew at a slower pace of an annualized 2.2 percent, after expanding at a rate of 5.5% in the previous three months. During the same period, industrial exports, not including diamonds, rose by a mere 0.7% in annual terms, after a quarterly surge of 5.1%.”

Hi-tech exports grew an annualized 11.6% in the reported period, after contracting 4.1% in the previous three months. Mixed hi-tech exports, such as chemicals, machinery and electronic equipment, declined an annualized 8.9% in March-May, after growing 47.3% in the December-February period.

Traditional industry exports, such as food and beverages, textiles, and wood products, grew an annualized 16.7%, down from 30.1% in the previous three months.

Exports of services rose 4.2% in seasonally adjusted terms in March- April, after growing 3.7% in the previous two months, led by exports of business and tourism services.

The number of hotel stays by tourists rose by 8.2% in March-May, after increasing 6.6% in the previous three months, while the number of hotel stays by Israelis increased 1.4%, down from 2.5% in the previous period.

Imports of raw materials, not including diamonds and energy, rose an annualized 16.4% in March-May, after expanding 9.6% in the previous quarter, the statistics bureau reported.

“Israel’s growth is maturing and changing focus,” Daniel Hewitt, an economist at Barclays Capital, said in a report to investors Wednesday.

“Reliance on net exports is no longer possible; instead, we expect imports to recover more than exports. Private consumption looks set to accelerate back to normal levels, in the range of 3% per annum growth.

“The main growth driver, in our opinion, will be an acceleration in investments, which we expect to recover gradually to 7% growth in 2011 from minus-7% in 2009.”

Barclays Capital expects GDP growth of 3.3% in 2010 and a slight acceleration in 2011. The Bank of Israel and the Finance Ministry are more optimistic in their forecasts of 3.7% and 3.6% respectively.

Hewitt said the economy’s main vulnerability was from geopolitical risks.

“The ongoing conflicts with Lebanon and the Palestinians, so far, have not had a lasting detrimental impact on Israel’s financial markets in recent years,” he wrote. “A tail risk exists that a more threatening conflict might break out, potentially negatively affecting growth and financial markets.”

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