Contrary to the more moderate forecasts of economists, Israel’s Central Bureau of Statistics announced on Sunday growth figures for the second quarter of 2013 of 5.1 percent.
Economists had looked for an annualized 3% growth in the second quarter, and were surprised by the actual figure.
Growth in the first quarter was at an annualized 2.7%, after it was measured at 3.1% in the fourth quarter of 2012.
GDP growth in the second quarter was driven by 6.7% growth in private consumption, 1.2% growth in exports, and an 8.3% growth in public consumption. These were partly offset by a 6.3% drop in investment in fixed assets.
The whopping increase in private spending was attributed to the VAT hike, which motivated people to bring forward purchases of homes, cars and other consumer durables.
The standard of living rose by 3.1% in the first half, after rising by 0.2% in the second half of last year and 2.1% in the first half. Private consumption in the first half was driven by a 10.2% per capita rise in purchases of consumer durables, and a 1.4% rise in current spending (on food, fuel, services, etc.)
Investment in fixed assets (homes, construction, equipment, and vehicles) fell by an annualized 6.5% in the first half, after falling by an annualized 7.7% in the second half, and 4.1% in the first half, of 2012.