PM satisfied as data suggests recession is over

GDP up 1% in Q2 of 2009; Steinitz: Too early to declare emergence from downturn.

stock exchange 224 (photo credit: Bloomberg)
stock exchange 224
(photo credit: Bloomberg)
Israel's economy has emerged from recession, according to data released by the Central Bureau of Statistics on Sunday. According to the report, the nation's GDP expanded at an approximate annualized rate of 1 percent during the second quarter of 2009, after two straight quarters of contraction (1.4% and 3.4% respectively). A recession is often defined as a period in which GDP contracts for at least two quarters. Sunday's statistics seem to suggest an end to that trend. In the first half of the year, Israel's GDP shrank an annualized 1.7%, after growing 0.9% in the second half of 2008 and 5.2% in its first half. During the second quarter of 2009, annualized data showed a 5.8% growth in exports of goods and services, a 4.4% growth in private consumption, and a 19.8% expansion in public consumption (excluding military imports). In contrast, fixed asset investment continued to decline at 10.3%. This was however an improvement on the decline in the first quarter, which stood at 28%. Prime Minister Binyamin Netanyahu expressed satisfaction over the statistics. "The aggregate data from the most recent quarters attest that the situation of the Israeli economy is better than those of the world's leading economies," he said. Netanyahu said that he and Finance Minister Yuval Steinitz would continue to lead a consistent economic policy that encourages both growth and stability in the economy. Steinitz said the report was "another encouraging piece of data in a series of positive signs that we have seen in recent weeks that demonstrates a stabilization of the economy." "We are certain that the economic plan and the government's biennial budget will continue to bear fruit in the coming months and lead the economy to fast sustainable growth," he continued. However, with a note of caution, he added that it was still "too early to declare an end to the crisis and an emergence from the recession." "We expect unemployment to rise further and job creation is among our top priorities," he said. "We must pay attention to the fact that fixed asset investment is still decreasing, which is likely to dampen long-term growth. The government will continue to act decisively in order to deal with the consequences of the crisis on the Israeli economy."