Trade deficit widens as imports soar

Energy imports jump 76 percent so far this year to $8.1 billion

export biz 88 224 (photo credit: Ariel Jerozolimski)
export biz 88 224
(photo credit: Ariel Jerozolimski)
srael's trade deficit widened in July as higher prices for energy and other commodities boosted the pace of import growth to almost double the rise in exports. The deficit, excluding diamonds, ships and aircraft, grew to a seasonally adjusted $1.63 billion from $892.4 million a year ago, the Central Bureau of Statistics said in a preliminary report Wednesday. While commodity imports rose, a slowdown in the pace of capital goods imports indicates that the country's economic growth is waning after gross domestic product expanded at more than 5 percent annually in the past four years. "Without a doubt the data show there is a certain slowdown in the economy, which we see in easing in the growth of capital goods imports," said Israela Many, chief economist of the Federation of Israeli Chambers of Commerce. "The slowdown isn't that serious, but businesses are concerned about economic uncertainty in the global area." The Bank of Israel said in June that GDP would grow 4.2% this year, its slowest since 2003, and will ease further in 2009. Exports of goods and services account for about 44% of Israel's GDP. Merchandise imports climbed 33% to $5.34b. in July, while exports rose 19% to $3.71b., the bureau said. The growth in imports of capital equipment, such as machinery, slowed to an annualized 5.7% in the three months through July from 18.1% in February-April, the bureau said. Imports of consumer goods increased 2.2%, easing from 10.9% in the previous three months. Energy imports jumped 76% in the first seven months from a year ago to $8.1b. Exports of industrial exports, which comprise three quarters of the total, rose an annual 16.8% in May-July, compared with 23.4% in the previous three months, the bureau said. In the first seven months of the year, the trade deficit averaged $1.1m. a month, or $13.4b. in annual terms, the bureau said. In 2007, the deficit for the year was $10.2b. Israel's trade deficit may begin to narrow soon as commodity prices fall, Many said. The price of crude oil has slipped 23% from a record $147.27 on July 11. While a weakening shekel may aid Israeli exports by making them more competitive, slowing world trade would probably mitigate the impact, she said. The shekel shed 12% against the dollar in the past month after the Bank of Israel boosted its foreign currency purchases fourfold. (Bloomberg)