Israel economic growth rate slows to 4.2 pct in Q2

JERUSALEM - Israel's economy showed its first signs of succumbing to a global slowdown, posting an annualised growth rate of 4.2 percent in the second quarter, the Central Bureau of Statistics said on Sunday.

By (Reuters)

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Published: Sun 24 Aug 2008, 5:44 PM

Last updated: Sun 5 Apr 2015, 11:57 AM

The bureau revised first-quarter growth to 5.6 percent from a previously reported 5.4 percent pace. It also revised 2007's growth rate to 5.4 percent from 5.3 percent.

Israel's economy is forecast to grow by 4.2 percent in 2008.

For the first half of 2008, the economy grew an annualised 5.3 percent to 345 billion shekels ($99 billion).

Analysts believe the data could be a key factor in Monday's short-term interest rate decision.

Bank of Israel Governor Stanley Fischer has long expected Israel's economy to slow on the heels of a decline in the United States and Europe. The second-quarter slowdown in growth could keep rates on hold despite an annual inflation rate of 4.8 percent in July -- above an official target of 1 to 3 percent.

The bureau said growth was led by continued gains in exports (up 6.6 percent) but that the slower rate in the April-June period stemmed from declines in consumer (down 3.6 percent) and public spending (down 3.3 percent) and imports (down 8.6 percent).

Excluding the large public sector, gross domestic product grew at an annualised 4.9 percent in the second quarter, down from a 6.5 percent rate in the first quarter, the bureau said.

Per capita GDP grew 3.4 percent in the first half of 2008.

Tel Aviv share prices were up 0.7 percent after the GDP data, while benchmark 10-year bond prices were 0.2 percent higher in afternoon trading.

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