Economy rebounded from Protective Edge with 7.2% growth in 4th quarter

Last quarter fueled by growth with an increase in exports and consumer spending.

By
February 16, 2015 16:20
1 minute read.
THE TEL AVIV skyline; the area around the city is home to many Israeli start-ups

THE TEL AVIV skyline. (photo credit: REUTERS)

 
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Israel’s economy rebounded dramatically in the fourth quarter of 2014, growing an annualized 7.2 percent after Operation Protective Edge helped slow growth in the third quarter to 0.6%, according to the Central Bureau of Statistics.

The annualized growth in the second half of 2014 was 2.6%, similar to the 2.7% in the first half of the year, but lower than the 3.4% growth in the second half of 2013.

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Growth in the second half of 2014 was fueled by a 7.9% increase in public spending and a 5.4% increase in private consumption. But export of goods and services only grew 0.6% and investment in capital stock fell 1.9%.

Growth in the last quarter was fueled by stronger exports and consumer spending.

The strong growth and currency will make it difficult for the Bank of Israel to justify another interest-rate cut, despite low inflation, according to Harel Finance’s Ofer Klein.

“The rapid growth alongside the increase in investment support continued growth in the coming quarters,” he said. “We – and probably the Bank of Israel and the Finance Ministry – are expected to update our growth forecasts for 2015 upwards.”

Other analysts noted that the figure could merely be a correction after the summer war with Gaza nearly eliminated growth in the previous quarter.



“In my opinion, we cannot conclude that the economy is on an accelerated growth path,” said Idan Azoulai, the chief investment officer at Epsilon.

The figure, which is the first estimate, could be revised downward in the future, he said, adding that another rate cut was still likely.

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