The Central Bureau of Statistics (CBS) reported that Israel's economy grew just 2.5% in the first quarter, on an annualized basis.
The CBS noted that Israel's latest growth figures are disappointing. GDP growth in the first quarter of 2015 was just 2.5% on an annualized basis, well below market expectations of 3.5%.
The annual growth forecast of the Bank of Israel is 3.2%. Growth in the fourth quarter of 2014 was 6.6% as the economy recovered from Operation Protective Edge, in the third quarter. In the first quarter of 2015, business output rose 3.2% compared with 7.7% in the preceding quarter. Private consumption expanded 5.5% in Q1, which was down from the 7.0% growth recorded in the previous quarter.
In addition, growth in government consumption slowed from 6.9% in Q4 to a weak 0.7% in Q1, which marked the slowest expansion since Q4 2013. Fixed investment contracted 5.8% in the first quarter, which contrasted the 9.2% expansion tallied in the fourth quarter of last year.
On the external front, exports of goods and services expanded 3.1% in Q1, which was a significant slowdown over the 10.2% increase observed in the previous quarter. On the contrary, imports expanded 7.1%, which contrasted the 2.2% contraction seen in Q4.
As a result, the external sector’s net contribution to overall economic growth deteriorated from plus 4.2 percentage points in the fourth quarter to minus 1.4 percentage points in the first quarter.