Israel’s economic growth fell to an annualized 3.1% in the second half of 2006 from 5.9% in the first half because of the second Lebanon war during the summer, the Central Bureau of Statistics reported today. After GDP slumped by 0.7% in the third quarter, it rapidly recovered to grow by an annualized 8% in the fourth.
Growth in 2006 was 5.1%, following 5.2% in 2005 and 4.8% in 2004.
The war cost a lower-than-expected 0.3% of GDP, or NIS 2 billion. The Bank of Israel originally estimated the cost of the war at 1% of GDP, and the Ministry of Finance estimated it at 1.5-2%. The ministry’s estimate may have been intended to block exorbitant budgetary demands resulting from the heavy defense spending..
Despite the war, the standard of living rose by 3% during the second half of the year. Except for a 9% drop in the purchases of new cars, Israelis’ shopping spree continued unabated. Purchases of durable goods rose by 7.7% per capita in the second half, including a 14.2% increase in purchases of furniture and a 23% increase in purchases of appliances. Investment in fixed assets rose by 9%.
Investment in residential construction rose by 5.7%, investment in public construction rose by 10%, and investment in industry by over 11%. Exports rose by only an annualized 1.4% in the second, and imports rose by an annualized 2.8%. Business product rose by 2.8% in the second half, after rising by 7.7% in the first half; business product rose by 6.6% in 2006 as a whole.
GDP totaled NIS 624 billion, business product was NIS 456 billion, and GDP per capita reached NIS 88,500 at the end of 2006.
Published by Globes [online], Israel business news - www.globes.co.il - on February 22, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007