Israeli Growth Accelerates to 5.1% as Consumer Spending Rises

Israel’s economy expanded by 5.1 percent in the second quarter as private consumption climbed.

Annualized growth accelerated from a revised 2.7 percent in the previous three months, the Jerusalem-based Central Bureau of Statistics said in an e-mailed statement today. The median estimate of eight economists surveyed by Bloomberg was 3 percent.

“This seems like an outlier,” said Yonie Fanning, chief economist for I.L.S. Brokers Ltd. in Tel Aviv. “I wouldn’t count on seeing this kind of growth for the year as a whole.”

The Bank of Israel has lowered the benchmark interest rate from 3.25 percent in 2011 to 1.25 percent to shore up the export-dependent economy amid the European debt crisis. Growth is forecast to slow to 3.2 percent in 2014 from 3.8 percent this year, including first-time natural gas production, the Bank of Israel said in June.

Private consumption rose as consumers rushed to buy large-ticket items such as homes and cars ahead of a June 1 increase in value-added-tax, and that probably will moderate, Fanning said. Government consumption also will probably ease as budget cuts are implemented, he said.

Private consumption expenditure rose by 6.7 percent in the second quarter, after climbing 5 percent in the previous three months. Government consumption expenditure rose 8.3 percent, after dropping 0.2 percent.

Exports advanced an annualized 1.2 percent in the second quarter, after jumping 10.9 percent in the first, while imports grew 1.8 percent, the same as in the previous 3 months, the bureau said.

Investment in fixed capital such as machinery and buildings declined for a fifth consecutive quarter, by 6.3 percent, after falling 2.7 percent in the previous period.

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