Economy grows 4.8% in fourth quarter

Rise driven by strong growth in exports of goods and services, and private and public consumption

The economy expanded 4.8 percent in annual terms in the fourth quarter last year, slightly slower than the preliminary 4.9%, driven by strong growth in exports of goods and services, and private and public consumption, the Central Bureau of Statistics reported Sunday.
“Thanks to good momentum in household consumption and exports and continuous support from government consumption, real GDP was up in the fourth quarter of 2009,” Reinhard Cluse, an economist at UBS investment bank, said Sunday. “Remaining weakness was visible in fixed investment, which was down both in quarter-on-quarter and in year-on-year perspective. But overall, the encouraging signs clearly dominated. Overall economic activity suggests that the economic recovery in Israel has remained firmly on track during the first quarter and into the second quarter of 2010.
“The big picture remains that thanks to its sound macroeconomic and structural fundamentals, the Israeli economy appears well-positioned to recover from the global crisis and return to respectable growth rates earlier than many other EMEA [Europe, Middle East and Africa] economies.”
Growth accelerated in the last quarter of 2009 to an annualized 4.8%, compared with positive growth of 3.6% in the third quarter and 1.2% in the second quarter, after contracting by 2.7% in the first quarter.
The economy expanded 0.7% for the year, compared with 4% in 2008 and 5.2% in 2007. In comparison, member economies of the Organization of Economic Cooperation and Development contracted at an average rate of 3.5% in 2009.
In light of strong economic indicators, the Bank of Israel raisedits growth forecast for 2010 to 3.5% from 2.5%, while the InternationalMonetary Fund expects growth of 2.5% this year.
The statisticsbureau’s figures showed that business-sector growth in the fourthquarter expanded at an annualized 5%, up from a preliminary 4.2%,compared with an annualized rate of 3.1% in the third quarter and 1.2%in the second quarter. Growth was boosted by industrial production andfinancial services.
Consumer spending rose an annualized 5% inthe fourth quarter, after growing 4.1% in the third quarter and 8.6% inthe second quarter.
Exports of goods and services surged anannualized 47.3%, including and increase of 15.8% in the fourthquarter, after expanding 15.8% in the third quarter. Industrialexports, not including diamonds, rose 31.8% in annual terms, whileexports of diamonds jumped 123.3% in annual terms during the fourthquarter.
Imports of goods and services grew 13.6% in annualterms in the the fourth quarter, after expanding 14.8% in the thirdquarter. Imports, not including defense, ships, planes and diamonds,rose 4.5% in the fourth quarter, after growing 14.5% in the thirdquarter.
Investment in fixed assets including residentialhousing, construction and transportation declined an annualized 8.5% inthe fourth quarter, after growing 5.3% in the third quarter. Investmentin residential construction rose an annualized 2.4% in the fourthquarter, while investment in nonresidential construction dropped anannualized 17%.