The Bank of Israel Research Department reduced its 2015 growth estimate to 2.4% from a prior forecast of 3.0% in September.
The factors contributing to the downward revision of the growth forecast include the lower growth forecasts for global trade and imports by OECD countries and the downward revision of assessments regarding the level of activity in second half of 2015.
The Research Department sees the economy growing by 2.8% in 2016, below a previous 3.3% estimate and projects 2017 growth of 3.1%, based on improvements in exports and investment in fixed assets.
The central bank expects inflation to be -0.8% in 2015, 0.6% in 2016 and 1.6% in 2017. The bank's Research Department estimates the key interest rate will stay at 0.1% for the first three quarters of 2016 and start rising in the fourth quarter to end the year at 0.25%, then increase to 1% by the end of 2017.