Bloomberg News

Israel Revises First-Quarter Economic Growth Down to 2.7%

July 16, 2012

Israel’s economy expanded an annualized 2.7 percent in the three months through March, the statistics office said, revising the figure down for a second time as export markets stall.

Growth slowed from 3.1 percent in the previous three months, the Jerusalem-based Central Bureau of Statistics said in an e-mailed statement today. The bureau’s initial estimate for growth in the first quarter was 3 percent, and that was revised down to 2.9 percent last month.

“We believe that the global situation is taking its toll on the domestic economy, and the pace of growth continued to slow in the second quarter,” Bank Hapoalim Ltd. said in a report before the release.

Economic growth is expected to decelerate to 3.1 percent this year from 4.8 percent in 2011, according to central bank estimates, as Europe struggles with a debt crisis and the global expansion slows. More than 40 percent of Israel’s gross domestic product is made up of exports, with Europe one of the largest markets.

Israeli exports fell 11.9 percent in June, the biggest drop this year. Inflation slowed to a five-year low of 1 percent, the bottom of the government’s target range.

The Bank of Israel cut the benchmark interest rate by a quarter percentage point to 2.25 percent on June 25, the first reduction in five months, citing a “high” level of global economic risk.

The bank may cut another quarter-point off the rate next month and is likely to reduce its growth forecast, said Jonathan Katz, a Jerusalem-based economist for HSBC Holdings Plc.

To contact the reporter on this story: Alisa Odenheimer in Jerusalem at aodenheimer@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.


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