Israel’s economy will probably expand 3.4 percent this year, less than the central bank forecast, the official statistics office said in its first estimate of 2013 growth.
Growth would be the same as last year, the Jerusalem-based Central Bureau of Statistics said at a press conference today. The Bank of Israel in June forecast 3.8 percent growth.
“Growth is pretty good compared to the rest of the world,” Daniel Hewitt, a London-based economist at Barclays Plc, said before the announcement. “Indicators are mixed. It has a downward feel to it all, except for consumption. Exports have been very volatile. Consumption has been just great. The consumer is holding up the Israeli economy.”
The central bank has gradually reduced the borrowing rate to 1.25 percent from 3.25 percent in 2011 in an effort to shore up the economy amid slowing global growth. Exports account for about 35 percent of gross domestic product.
Israel’s $250 billion economy rebounded from the global crisis faster than most peers. Between 2009 and 2012, output expanded by 14.7 percent, compared with 10.7 percent in Australia, 3.2 percent in the U.S. and a contraction of 1.5 percent in the euro region, the Finance Ministry said in a January report.
Output was helped this year by new gas production that began in the spring and will add an estimated 1 percentage point to annual growth, Hewitt said.
“The biggest factor is the gas production,” Hewitt said. “That is providing a boost to the economy.”
Private consumption will rise 4 percent in 2013, after growing 3.2 percent a year earlier, the bureau said. Public consumption will probably rise 2.3 percent, after increasing 3.2 percent last year.
Exports, excluding diamonds and start-up companies, will be unchanged, after rising 4.1 percent last year, the statistics bureau said.
The country’s strengthening shekel, declining global trade, and efforts by some countries to limit imports to shore up domestic manufacturers are all reducing Israeli exports, the Israel Export & International Cooperation Institute said in a report yesterday.
The shekel is the best performing currency this year among 31 major currencies tracked by Bloomberg, strengthening by almost 6 percent this year against the dollar.
Fixed investment declined 2.4 percent, after rising 3.5 percent the previous year, the bureau said.