January 1, 2018

Bottom line: Chugging along nicely. No big surprises, good or bad, in the early estimate for full-year data that the Central Bureau of Statistics (CBS) traditionally publishes on December 31. The growth was entirely domestically-generated, while import growth exceeded export growth, shrinking the surplus on current account.


  • Gross Domestic Product (GDP) expanded by 3% in 2017, in line with forecasts and slightly below the average for the last five years (3.4%).
  • In per capita terms, GDP growth was only 1%, which the CBS noted was below many OECD countries — reflecting Israel’s 1.9% population growth in 2017, which is the highest among developed economies.
  • Growth was driven by domestic factors — private and public consumption and investments. Since import increased by more than exports the external sector was a drag on growth in 2017, although to a lesser extent than in 2016.
  • Private consumption growth was 3%, half the rate of 2016. Spending was concentrated in non-durable and semi-durable goods, but spending on consumer durables was down almost 11%, due to a 25% slump in purchases of new cars.
  • Businesses, too, bought 30% fewer new vehicles in 2017, reducing the overall increase in investment to only 2.7%, compared to 11.9% in 2016. However, investment in plant and equipment was strong (7.6%), as was non-residential construction (9.4%).
  • Residential construction posted a modest 2.4% gain, after rising 8.1% in 2016.
  • With import growth outpacing export growth, the surplus on Israel’s current account is estimated to have fallen from US$12bn in 2016 to US$9.6bn in 2017. In terms of GDP, the surplus shrank from 4.6% to 2.8%.
  • The budget deficit shrank dramatically, from 1.8% of GDP in 2016 to only 1.1% in 2017 — the lowest level since 2007.
  • Productivity is estimated to have posted a small rise of 0.4% — better than the miniscule 0.1% increase of 2016, but still worryingly low.

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