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Israel strongly outpaces 1.4% average growth rate for Western nations Photo: Index Open
Israel strongly outpaces 1.4% average growth rate for Western nations Photo: Index Open
 
 

Israeli economy grows 3.3% in 2012

Despite slowest pace in three years due to scant export growth, Jewish state's economy still outperforms many other developed countries

Reuters
Published: 01.02.13, 08:11 / Israel Business

Israel's economy grew an estimated 3.3% in 2012, its slowest pace in three years due to scant export growth, but still outperformed many other developed countries.

 

Growth slowed from a 4.6% spurt in 2011, mainly due to recessions in Europe, Israel's largest trading partner, weak growth in the United States and slower growth in Asia.

 

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Consumer spending and investments also grew more slowly in 2012 than a year ago, although public spending rose.

 

But while it lagged emerging economies such as China, which grew 7.5%, Israel strongly outpaced the 1.4% average growth rate for Western nations.

 

"Given the international situation, the Israeli economy is doing very well," Shlomo Yitzhaki, the government's statistician, told a news conference on Monday. He referred to the figures as "the best considering the current situation… Whether it's because of the government or despite the government, I can't say."

 

The Bank of Israel predicts even weaker growth in 2013. Last week, it lowered short-term interest rates for the second time in three months, taking the key rate to 1.75%, and also lowered its 2013 growth projection to 2.8% from 3%, excluding natural gas output.

 

Israel's growth was in line with central bank and Finance Ministry estimates but the weakest since 1.1% in 2009, falling short of the bureau's initial estimate of 3.5%.

 

Europe's troubles held back Israeli exports - more than 40% of economic activity – which grew 1% this year, largely due to a 22.1% drop in diamond exports, versus a 5.5% gain in 2011. Some 35% of exports go to recession-hit Europe.

 

Excluding diamonds, exports grew 4.2% this year.

 

Private spending growth slowed to 2.8%, while investment in fixed assets grew 3.7%, down from 16% in 2011. Government spending rose by 3.7%, faster than 2.9% last year.

 

For the third quarter, the economy grew an annualized 2.8%, below a previous estimate of 2.9% and the slowest pace since the second quarter of 2009.

 

Exports in the quarter slipped 5.6%, while imports slid 11.9%. Private spending edged up 0.5% and investment in fixed assets dipped 6% despite a rise in residential building investment.

 

Avital Lahav contributed to this report

 

 

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