JERUSALEM (Reuters) – Israel’s economy grew an annualised 1.8 percent in the second quarter of 2018, slower than previously thought, weighed down by a steeper drop in exports and a decline in consumer spending, the Central Bureau of Statistics said in a second estimate.
In a preliminary estimate last month, the bureau said gross domestic product (GDP) grew an annualised 2.0 percent in the April-June period, less than the average forecast of 2.4 percent in a Reuters poll.
The bureau on Sunday also raised its first-quarter GDP estimate to 5.1 percent from 4.8 percent.
Over the first half of 2018, the economy grew an annualised 4.1 percent.
The Bank of Israel, which forecasts 3.7 percent growth in 2018, has played down the second-quarter data, saying it does not indicate a change in trend, with most of the decline in growth deriving from fluctuations in vehicle imports.
It also has noted that more recent indicators show the economy “continuing to grow at a solid pace” led by strong consumer spending.
Excluding net taxes on auto imports, GDP rose 2.8 percent in the second quarter compared with 3.9 percent in the first quarter.
The central bank last month again held its benchmark interest rate at 0.1 percent, where it has remained for 3-1/2 years. A rate increase is expected as early as the fourth quarter of this year now that inflation has moved back to within its 1-3 percent target range.
Israel’s annual inflation rate dipped to 1.2 percent in August from 1.4 percent in July.
In the second quarter, exports – which comprise over 30 percent of economic activity – fell 2 percent, more than a preliminary estimate of a 0.1 percent decline. Private consumption fell 1.7 percent versus an initial 0.5 percent rise.
Investment in fixed assets fell 3.7 percent, government spending decreased by 3.9 percent and imports rose 1.3 percent.