Israel's gross domestic product (GDP) increased at an
annualized rate of 1.7 percent during the first quarter,
compared with a 9.8 percent drop in the fourth quarter of
2000, the Central Bureau of Statistics (CBS) reported on
Monday. A year ago, it was up 6.5 percent in the first
quarter.
The CBS attributed the gain to a 10 percent increase in
private consumption. It also said that investments in fixed
assets jumped 33.7 percent, while general investment
increased 12.2 percent, compared to falling 12.5 percent in
the same quarter last year. It appeared that the economy was
recovering from the shock of the Palestinian violence that
began just towards the end of the third quarter of 2000.
Observers agree that the problems of the Israeli economy are
due to two main factors: the technology crash in America and
on the American stock markets, and the Palestinian violence
known as the Al Aqsa Intifadah. However, no one has so far
been able to determine the extent of the individual
contribution of each one.
Per capita GDP dipped 1.1 percent because of the increase in
population from births and immigration, after plummeting
12.2 percent in the previous quarter. Business sector GDP
gained 2.5 percent, compared to a 16 percent fall in the
final quarter of 2000. According to the CBS, the slowdown in
the economy this year was mostly attributable to faltering
technology start-ups, without which the GDP would have risen
4.2 percent in the quarter.
Overall 2000 GDP growth was 5.9 percent -- all of it in the
first three quarters. Last year began with an unprecedented
growth of 11.25 percent in the first quarter, but ended with
a sharp drop of 9.8 percent in the last quarter after the
outbreak of the Intifadah. Both the Finance Ministry and
International Monetary Fund expect it to be positive but
they predict it will only reach 1.5 percent-2 percent this
year. However, the Finance Ministry expects growth to
accelerate, and expects that the fourth quarter will show a
more robust rate of growth.
Before the violence and the Wall Street problems, economic
growth had been forecast to reach 6 percent this year.
Israel's GDP per head now stands at $17,606, down from a
peak of $18,645 in the third quarter of 2000. These levels
place Israel at a respectable place in the hierarchy of
economically developed countries.
Exports of goods and services, excluding start-ups, dropped
in the quarter by 14.0 percent, following a sharper drop of
18.9 percent in the previous quarter. Diamonds and
agricultural goods accounted mostly for this significant
drop, while industrial exports remained almost unchanged.
The Palestinian violence was particularly disruptive to the
agricultural sector since Palestinians make up a large part
of the labor force that does the harvesting.
Private consumption grew 10.0 percent in the first quarter,
while consumption per head was 6.9 percent up.
