Last year’s growth beats previous estimate

The economy grew 0.7 percent, faster than the government estimate of 0.5%.

March 11, 2010 06:14
2 minute read.
crude graph 88 298

crude graph 88 298. (photo credit: )


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The economy grew 0.7 percent last year, faster than the previous government estimate of 0.5%, the Central Bureau of Statistics reported Wednesday.

That compares with 4% in 2008 and 5.2% in 2007. Members of the Organization of Economic Cooperation and Development contracted at an average rate of 3.5% in 2009.

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Gross Domestic Product increased 4.9% in the fourth quarter, more than the preliminary estimate of 4.4%. The expansion was led by exports, which grew 42%.

Since the first quarter of last year, when the economy contracted at an annualized rate of 2.7%, the economy emerged from the recession, growing at an annualized of 1.3% in the second quarter and 3.6% in the third quarter (the previous estimate was 3%).

In light of strong economic indicators, the Bank of Israel raised its growth forecasts for 2010 to 3.5% from 2.5%. The International Monetary Fund expects Israeli economic growth of 2.5% this year.

Economists at Bank Leumi expect the continued expansion in the economy in recent months, in particular in the last quarter of 2009, to bring down the unemployment rate.

“On the back of strong growth in the fourth quarter of 2009, we expect the economy to grow at a rate of 3.5% this year and business-sector growth to expand at a rate of 4%, which in turn will further bring down the unemployment rate to an annual average of 7%, from 7.4% in the last quarter of last year,” Gil Bufman, chief economist at Bank Leumi, said in a report. “This means that the unemployment rate can be expected to fall below 7% over the course of the year.”

The statistic bureau’s data showed that private consumption grew 1.5% last year, compared with an expansion of 3.6% in 2008 and 6.3% in 2007.

Last year, purchases of cars for private use fell 20.4% per capita, while purchases of household furniture dropped 9.1%. Public consumption rose 2.1%.

Macroeconomic data indicated that growth, in per-capita terms, fell 1.1% in 2009, mainly do to strong population growth, after expanding 2.2% in 2008 and 3.4% in 2007.

Business-sector product growth, excluding public services and housing services, declined 0.2% last year, after growing 4.5% in 2008 and 5.7% in 2007.

Manufacturing product growth was down 6% in 2009, after growing 6.2% in 2008 and 4.4% in 2007.

Exports of goods and services fell 12.5% last year, after expanding 5.2% in 2008, while imports of goods and services were down 14%, after increasing 2.4% in 2008.

Investment in fixed assets dropped 6% last year, after growing 4.4% in 2008 and 15.3% in 2007.

Bloomberg contributed to this report.

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