Economic activity in Israel shot up in the third quarter following the exit from the first lockdown, but several worrying signs remain. According to the initial estimates released by the Central bureau of statistics today, Israel's gross domestic product (GDP) rose by almost 38% on an annualized basis in the July-September period. This is in comparison with the second quarter, in which whole sectors of the economy were inactive because of the lockdown. These sectors returned to full or partial activity in the third quarter.
In the second quarter of this year, GDP shrank by an annualized 29.8%, after shrinking by an annualized 7% in the first quarter.
The figures published today relate to the third quarter, and provide little indication of the effect of the second lockdown imposed in Israel, which started in mid-September. And alongside the recovery in most sectors in the third quarter, some important measures showed decline, among them imports of services and investment in plant and machinery.
Nevertheless, an international comparison published by the Central Bureau of Statistics shows that the negative impact on the Israel economy of the coronavirus pandemic in the first nine months of 2020 was relatively low. The level of economic activity in Israel in the third quarter of 2020 was only 1.4% below its level in the third quarter of 2019. This is a slightly larger gap than was recorded in South Korea (1.3%), but it is considerably smaller than in the US (2.9%), Sweden (4.1%), Germany (4.2%), France (4.3%) or Spain (8.7%).
"In terms of GDP levels, the recovery in the economy in the third quarter of the year brings us to a level in real terms, seasonally adjusted, similar to that of the first quarter of 2019," the Central Bureau of Statistics says. Where there has been a significant hit is in private consumption, the economy's main driver. On that, the Central Bureau of Statistics says "the level of consumption of service in real terms is still very low, and is similar to the level of 2004."
The Central Bureau of Statistics repeatedly stresses the methodological challenges that make it difficult for it to analyse the growth data, and states that the reliability of the seasonally adjusted figures is limited. It says that it has decided not to release preliminary annual growth estimates at the end of this year "in the light of the situation and the challenges in estimating GDP."
Published by Globes, Israel business news - en.globes.co.il - on November 16, 2020
© Copyright of Globes Publisher Itonut (1983) Ltd. 2020