Chief Economist: Don’t Count on Recent Growth Figures


Israel’s encouraging recent growth figures are not as encouraging as they seem, according to the Ministry of Finance’s chief economist.

“The figures for the composition of growth in 2016 could indicate that the current growth rate is not necessarily sustainable,” Ministry chief economist Yoel Naveh cautioned in his weekly review, published on Sunday.

Naveh explained that the Central Bureau of Statistics data released last week depended to a large extent on one-time factors, such as car purchases and the upgrade of the Intel factory, and thus could not be relied upon to support long-term growth.

The third-quarter GDP growth rate estimate published by the CBS was 3.2 percent, reflecting growth in all GDP elements other than exports. Private consumption (especially higher vehicle purchases) and upgrading of the Intel fab were the main factors in the accelerated growth rate.

At the same time, the chief economist notes that the rapid growth trend in private consumption slowed slightly in the third quarter, contributing “only” 1.7 percent to third-quarter growth.

“A look at the composition of growth in 2016 arouses concern that the current composition of growth is not necessarily sustainable. The relative slowdown in private consumption in the third quarter could indicate that some of the reasons for the growth in private consumption in recent quarters are short-lived,” the report stated.