Bloomberg News

Israel Economy Posts Slowest Growth Since 2009 on Exports

February 17, 2013

Bank of Israel Governor Stanley Fischer

The central bank’s monetary policy committee, led by Bank of Israel Governor Stanley Fischer, kept its benchmark interest rate unchanged at 1.75 percent at the end of January. Photographer: Kiyoshi Ota/Bloomberg

Israel’s economy expanded an annualized 2.5 percent in the fourth quarter, the slowest in more than three years, as exports declined and investments fell.

Growth slowed from a revised 2.8 percent pace in the previous three months, the Jerusalem-based Central Bureau of Statistics said in an e-mailed statement today. The median estimate of eight economists surveyed by Bloomberg was for growth of 2.7 percent.

“The figures point to an across-the-board weakness in exports, in investment, and in consumption,” said Alex Zabezhinsky, chief economist at DS Securities & Investments Ltd. in Tel Aviv. “We had been doing very well compared to the rest of the world and now things are deteriorating a bit.”

The central bank’s monetary policy committee, led by Governor Stanley Fischer, kept its benchmark interest rate unchanged at 1.75 percent at the end of January, after gradually reducing it from 3.25 percent in 2011 in an effort to shore up the economy amid the European debt crisis. Fischer said last month that he will step down at the end of June.

“The data supports further loosening,” said Jonathan Katz, a Jerusalem-based economist for HSBC Holdings Plc. January data on industrial exports and tax revenue “seems pretty dismal,” he said.

Housing Prices

Katz said that while he may forecast a decision to hold the benchmark rate again at the end of this month, he couldn’t “rule out a rate cut in the second quarter, if housing prices do stabilize,” he said.

Israel’s economy will probably expand 3.8 percent in 2013, the Bank of Israel said in December, updating its forecast to include natural gas production. Excluding gas output, the growth outlook was revised down to 2.8 percent, it said.

The yield on Israel’s 2.5 percent notes fell four basis points, or 0.04 percentage point, to 2.28 percent at 2:48 p.m.

Exports declined an annualized 6.5 percent in the fourth quarter, after shrinking 8 percent in the third. Imports fell 8.1 percent, after dropping 10.9 percent, the bureau said. Exports make up about 40 percent of Israel’s gross domestic product.

Investments fell at an 11.7 percent pace, after dropping 4.1 percent in the previous quarter, the bureau said. Private consumption was little changed, rising an annualized 0.3 percent, after a 1.1 percent increase in the third quarter.

Government consumption rose an annualized 5.1 percent in the fourth quarter, after an 0.9 percent increase in the previous three months.

To contact the reporter on this story: Alisa Odenheimer in Jerusalem at

To contact the editor responsible for this story: Andrew J. Barden at

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