(Globes, TheMedialine).Israel's GDP rose 4.5% in 2010, in fixed prices, according to preliminary estimates by the Central Bureau of Statistics. Israel's GDP growth was almost double the expected OECD average of 2.7% for the year.
Israel's GDP rose by 0.8% in 2009, and rose by 4.2% in 2008. The 2010 growth figure is unexpectedly strong; economic organizations had predicted 4% growth.
Israel's average unemployment rate of 6.7% in 2010 is well below the OECD average of 8.3%.
The Central Bureau of Statistics cited three noteworthy developments in 2010: the rapid growth of exports, which began in the second half of 2009, ended in the third quarter of 2010; the rapid growth in private consumption, which began at the same time, also slowed; and steady growth continued in investment in fixed assets, including housing starts.
Israel's GDP per capita rose by 2.7% in 2010, after falling 1.1% in 2009, during the severe global economic crisis and the sharp slowdown in Israel's economic growth. Israel's performance in this variable was also above the OECD average of 2.3%.
Business product rose 5.3% in 2010 after rising by just 0.1% in 2009.
Investment in fixed assets, including in residential housing, stands out in particular, rising 10% in 2010, compared with the OECD average of 2.2%.
Israel’s gross domestic product will probably expand 3.6% in 2011, according to a median of 12 forecasters polled by The Media Line. But Israeli growth is on track to outpace the average for the world’s developed economies, which the International Monetary Fund (IMF) estimated in October would be 2.2%.
Exports, led by chemical pharmaceutical and technology, jumped more than 20% in the first 11 months of the year as demand in the U.S. and Europe, Israel’s biggest markets, emerged from recession. But the demand will grow much less this year, with the IMF forecasting imports from the developed world increasing about 5% in 2011, half this year’s rate.
“The situation of the Israeli consumer isn’t bad at all – unemployment is falling and wages are stable. In investment, which had been weak, we saw revival in 2010 and it will continue growing next year,” Ron Eichel, chief economist at Meitav Investment House in Tel Aviv, told The Media Line. Nevertheless, he said GDP would grow 4% next year, matching its 2010 pace.
The growth story comes in sharp contrast to political malaise. Prime Minster Benjamin Netanyahu’s government has had rocky relations with its key American ally and peace talks with the Palestinians are stalled. The country faces a strategic threat from Iran as well as tensions on its borders with Lebanon and the Gaza Strip.
But business people and investors have largely ignored politics. The Tel Aviv Stock Exchange’s TA 25 blue chip index has risen some 14% this year after a 75% jump in 2009. The shekel reached its strongest in two years at 3.569 in October and on Tuesday traded close to that level. Foreign investment reached $7.8 billion in the first three quarters of this year, 10% more than the same time in 2009.
This year, Israel was welcomed into the Organization for Economic Cooperation and Development, the club of the world’s most advanced economies, while its stock market was upgraded from emerging market to developed-economy by MSCI, whose indices are used by investors as a global benchmark for allocating their portfolios.
Vered Dar, chief economist at Psagot Investment House, said Israel’s economy was positioned strongly enough to weather any crisis abroad. “The potential for drama, if there is any in the U.S. and Europe, will affect our capital markets, less than the real economy,” she said, forecasting GDP growth for Israel of 3.5% this year.