Israel's Ministry of Finance has revised Israel's GDP growth forecast for 2021 upwards from 5.5% to 7.1%. The growth forecast for 2022 remains unchanged at 4.7%. The Bank of Israel sees 7% growth in 2021 and 5.5% in 2022.
The Ministry of Finance sees that the contraction in GDP growth last year because of the Covid crisis already being made up for this year. The revision upwards in the growth forecast stems from the recovery of the economy and a rapid rise in private consumption but also due to a revision in the methodology by which the Central Bureau of Statistics which has increased the potential growth rate by moderating the increase in product prices. Thus the average growth rate for the past five years has been revised up to 3.8% from 3.3%.
The Ministry of Finance sees private consumption, which was hit by 9.2% last year during the Covid crisis, recovering this year at a faster rate and expects this to continue into 2022 with a growth rate of 7.5%, among other things due to growth in exports and degree of recovery in the tourist industry.
Due to supply chain disruptions, the Ministry of Finance has raised the inflation forecast for 2021 from 1% to 1.5%, and the inflation forecast for 2022 has been increased from 0.5% to 2.1%.
Published by Globes, Israel business news - en.globes.co.il - on November 15, 2021.
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