April 16, 2018 / 10:53 AM / a year ago

UPDATE 1-Israel economy grows faster than thought in second half of 2017

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JERUSALEM, April 16 (Reuters) - Israel’s economy grew more strongly in the second half of 2017 than previously thought, published data showed on Monday, and growth is expected to remain steady for the rest of 2018.

Gross domestic product grew by an annualised 4.1 percent in the fourth quarter of 2017 in a third estimate, faster than the 3.6 percent pace given in a prior estimate a month ago, the Central Bureau of Statistics said.

Much of the revision stemmed from higher private spending and a smaller decline in investment.

Third-quarter growth was revised to an annualised rate of 4.3 percent from 4.0 percent.

For all of 2017, Israel’s economy grew 3.3 percent.

The Bank of Israel currently estimates growth of 3.4 percent this year and 3.5 percent in 2019, although the bank is widely expected to leave short-term interest rates unchanged for at least another year due to near zero inflation.

The bureau on Sunday said Israel’s inflation rate remained at 0.2 percent in March, well below the government’s 1-3 percent annual target.

However, policymakers have said that the benign inflation is not a reflection of weak demand but rather a strong shekel and government measures to reduce the cost of living.

The central bank has also noted that the composition of growth in Israel’s economy has become more balanced, with exports rebounding on the back of stronger global trade.

In the fourth quarter, exports — which account for about 30 percent of Israel’s economic activity — grew 9.6 percent for its second straight quarterly jump.

Private consumption, another key economic driver, grew 1.7 percent from the third quarter, versus 1.0 percent in the prior estimate and 7.1 percent in the third quarter. Investment slipped 3.1 percent, while government spending soared 10.6 percent and imports gained 2 percent. (Reporting by Steven Scheer Editing by Gareth Jones)

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