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UPDATE 1-Israel Q4 GDP revised higher to +6.5 pct, played down by cenbank
March 9, 2017 / 1:11 PM / 9 months ago

UPDATE 1-Israel Q4 GDP revised higher to +6.5 pct, played down by cenbank

(Adds details)

By Steven Scheer

JERUSALEM, March 9 (Reuters) - Israel’s economy grew at an annualised 6.5 percent in the fourth quarter of 2016, faster than anticipated, government data showed on Thursday, citing higher exports, investment and consumer spending at the end of the year.

In its preliminary estimate last month, the Central Bureau of Statistics said gross domestic product grew 6.2 percent, above expectations of 3.7 percent growth.

After starting off 2016 slowly, growth picked up and Israel’s economy grew 4.0 percent, unchanged from last month’s estimate, to 1.2 trillion shekels ($325 billion). Growth is projected at 3.2 to 3.5 percent in 2017.

Third-quarter gross domestic product growth was revised to 4.1 percent from 4.2 percent.

Despite a sharp rise in the last three months of 2016, the Bank of Israel has played down the data, attributing the gain to extraordinary factors.

In keeping the benchmark interest rate at 0.1 percent for a 24th straight month on Feb. 27, the central bank said the quarterly jump was based on an “atypical increase” in sales of vehicles reflecting purchases being brought forward in advance of a revision of taxes at the start of 2017.

Growth, it added, was slightly above 3 percent in the fourth quarter excluding the one-off factor.

Similarly, Bank of Israel Deputy Governor Nadine Baudot-Trajtenberg told Reuters last week that even a 4 percent growth rate last year did not point to a “step-up” in the economy given Israel’s annual population growth of 2 percent.

The statistics bureau said per capita GDP grew 2.0 percent in 2016.

In the October-December period, exports - which comprise more than 30 percent of Israeli economic activity - grew 11.1 percent, private spending rose 3.8 percent and investment in fixed assets was up by 8 percent. Imports rose 6.5 percent and government spending was up 3.2 percent.

In 2016, exports grew 3 percent, private spending rose 6.3 percent and investment increased 11.3 percent.

Along with moderate economic growth, Israel has zero inflation. The annual rate was up by 0.1 percent in January after 28 months of falling prices, which coincided with a slump of energy prices worldwide.

$1 = 3.6877 shekels Reporting by Steven Scheer; editing by Tova Cohen/Mark Heinrich

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