The Israeli economy grew at a lower-than-expected rate of 3.2% in 2018, and this year's fiscal deficit will reach 3.4% of GDP, according to initial national accounts estimates released by the Central Bureau of Statistics today.
The Central Bureau of Statistics' projection for the deficit is higher than that of the Ministry of Finance, which estimates that the 2018 deficit will be between 2.9% and 3.1%, but the Central Bureau of Statistics uses different definitions from those used by the Ministry of Finance for measuring the public sector deficit, and includes in it the National Insurance Institute, public hospitals, the universities, and local authorities. Last year, under the Central Bureau of Statistics definitions, the fiscal deficit was 1% of GDP, whereas the deficit as measured by the Ministry of Finance was 2% of GDP.
The Central Bureau of Statistics explains the sharp rise in the deficit this year by the fall in tax collection, which was some NIS 2 billion less than in 2017.
Total government expenditure rose by 4.6% in 2018, which compares with a rise of 6.2% in 2018. Spending on public services and consumption, which amounts to 60.3% of total spending, rose by 5.7% this year at current prices. Spending on debt servicing rose by 7.3%.
The growth figures published by the Central Bureau of Statistics today are disappointing: the most up-to-date growth projection was 3.4%. During the course of the year, the growth forecast was raised by the Bank of Israel Research Department and other entities to 3.7%.
The reason for the low growth figure is a downward revision of the growth estimates for the first three quarters of the year, after updated, and weaker, figures were obtained for exports in the first half year and for investment in fixed assets in the third quarter.
Israel's population grew by 2% in 2018, so that GDP per capita rose 1.2%, after a rise of 1.5% in 2017. GDP per capita in 2018 totaled NIS 148,600, or $41,400, at current prices. According to OECD figures, GDP per capital rose by an average of 1.9% in OECD member countries this year.
The Central Bureau of Statistics stresses that its initial estimate is based on data that are incomplete or that are expected to be updated by their various providers. The next estimate of the 2018 national accounts, based on more complete data, will be published on March 10, 2019.
Published by Globes, Israel business news - en.globes.co.il - on December 31, 2018
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