Growth Rate Figures Boost Shekel

The shekel nosed up on Monday after Central Bureau of Statistics released encouraging figures on the growth rate of the Israeli economy, Globes reported.

The shekel, which had been weakening after Sunday’s CPI figure showing a drop of 0.9% in January, rebounded with news of a rate of 7.2% in the fourth quarter.

The shekel-dollar rate was NIS 3.8698/$ up 0.25% in comparison with Friday’s representative rate, at NIS 3.8733/$, and the shekel-euro rate was up 0.36%, at NIS 4.4216/€.

The growth figures were taken as a sign that fears of a deflation were overdrawn, and that the Bank of Israel will not be under pressure to reduce its interest rate for March.

GDP shot up by an annualized 7.2% in the fourth quarter, following only 0.6% annualized growth in the third quarter, when Operation Protective Edge took place, and 2.0% in the second quarter.

The increase in GDP in the second half of 2014 reflects a rise of 7.9% in spending on public consumption, 5.4% in spending on private consumption, and 0.6% in exports of goods and services, while investments in fixed assets were down 1.9%.

Imports of goods and services rose 3.0% in the second half of 2014, while total sources available to the economy in the second half (from domestic production and imports) were up by an annualized 2.5%, following a 1.8% increase in the first half.

As a result of the stagnation in the real estate sector during this period, investments in fixed assets (residential housing and the construction, equipment, and vehicles sectors) were down by an annualized 1.9% in the second half of 2014, following a 6.8% drop in the first half and a 5.7% rise in the second half of 2013. Investments in residential construction fell by an annualized 1.4% in the second half of 2014 and an annualized 2.0% in the first half.

This article appeared in print on page 6 of the February 17th, 2015 edition of Hamodia.