The growth figures presented by the CBS are very close to the Bank of Israel's annual growth forecast, presented a month and a half ago. In the Bank of Israel 2010 report, Governor Stanley Fischer raised the 2011 growth forecast from 3.9% to 4.6%.
One important parameter, however, saw a drop in economic activity – the government's spending on salaries and citizens' services.
According to the data, the spending on public consumption – which includes the citizens' consumption funded or subsidized by the State and the government's collective consumption (budget, civil servants' salaries, etc) – was down 5.7% in the first quarter.
This figure shows that in spite of the economic growth, the activity of the National Insurance Institute and non-profit organizations dropped in the first quarter, as did the value of services created by local authorities and government ministries, following a 6.6% rise in the second half of 2010.
The CBS stressed that its figures are based on initial assessments of the national accounts and that "these findings must be examined with caution" due to the relatively high irregularity in economical statistics series in Israel.
Growing investment in fixed assets
According to the data, investment in fixed assets (homes, construction, equipment and vehicles) jumped in the first quarter of 2011 by 23.7% according to an annual calculation, and by 5.5% according to a quarterly calculation, following a 19.7% annual rise in the previous quarter.
The growing investment in fixed assets mainly reflects a sharp rise in investments in machinery, equipment and vehicles – 9.9% according to a quarterly calculation (45.7% according to an annual calculation), which followed a 15.7% rise in the previous quarter (79% according to an annual calculation).
In most parameters, the economic activity was similar to the activity recorded in the third quarter of 2010 and slightly lower than the one recorded last quarter. In several categories, the economic activity increased in the first quarter of 2011.
The spending on private consumption rose by 6.8% in the first quarter, according to an annual calculation, following a 6.6% increase in the previous quarter and a 1.2% drop in the third quarter of 2010.
The level of investment in housing projects rose by 12% in the first quarter, according to an annual calculation. Investment in other construction projects rose by 12.9%.
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