The Israeli economy is now officially in recession.
The Israeli economy is now officially in recession.
Gross Domestic Product (GDP) fell sharply by 3.6 percent in the first quarter of 2009, in annual terms, Israel's Central Bureau of Statistics reported yesterday. This was much worse than most forecasts had predicted.
The official definition of recession is economic contraction - negative economic growth - for two consecutive quarters. Since GDP fell 0.5% in the last quarter of 2008, Israel is now officially in a recession.
All figures are in annualized terms.
The economy did grow 1.3% in the 3rd quarter of last year, but the first three months of 2009 were Israel's worst since the third quarter of 2001.
The big drops were in goods and services exports, as well as in investments in fixed assets. Private consumption also dropped sharply by 4.3%, and per capita consumer spending was down 6%. {People spent much less on food, drinks and tobacco, as well as durable goods such as refrigerators, washing machines and furniture. Consumer expenditures on other items, such as vacations, clothing, household goods and medicine, fell by 4.3%.
Business production dropped 4.2% for the quarter - outpacing the GDP contraction - after losing 1.6% in the previous quarter.
Goods and services exports plummeted a whopping 46%, but imports fell even further, by 62.7%. And the fall was across the board: Industrial exports fell 47.8%, agricultural exports were down 31.6% and tourism revenue fell a huge 75.4%. Diamond exports fell by only 11.4%.
One of the few increases in the period was in new car purchases, which were up 85.2%. There was a 3.5% increase in investments in residential construction, and a 22.8% rise in non-residential building.
In fact, housing prices rose by about 5% for the quarter, as opposed to decreasing as in the rest of the world.
