(Adds details, economist comments)
By Steven Scheer
JERUSALEM May 16 Israel's economy
grew at its slowest pace in almost two years in the first
quarter as investment and consumer spending fell, although
exports jumped, with changes to the way cars are taxed heavily
distorting the numbers.
In its preliminary release on Tuesday, the Central Bureau of
Statistics said first-quarter growth was an annualised 1.4
percent, the lowest rate since April-June 2015. It also revised
down its growth estimate for the fourth quarter of 2016 to an
annualised 4.7 percent from 6.3 percent
A Reuters poll had forecast 3.7 percent growth for the
The fourth-quarter reading had been boosted by extraordinary
factors including a spike in sales of vehicles that occurred
before the tax hike -- which ties the tax payable at purchase to
the car's carbon emissions -- at the start of 2017. This also
negatively impacted the first three months of 2017.
Excluding net taxes on imports -- which eliminates much of
the one-time auto tax effect -- gross domestic product grew an
annualised 3.3 percent in the first quarter, the bureau said.
"That's the better number to look at," said Bank Leumi chief
economist Gil Bufman, noting the auto tax issue had weighed on
the private spending, investment and import components.
"The 1.4 percent (headline number) is quite misleading. The
economy did better than that."
Israel's economic growth is projected to slow to a rate of
about 3 percent this year from 4 percent in 2016.
The January-March quarter saw exports, which comprise more
than 30 percent of Israeli economic activity, rise by 10.6
percent, their second straight quarterly gain.
After strong gains the first half of 2016, private spending
slipped by 1.6 percent while investment in fixed assets declined
by 5.6 percent, although investment in residential building
grew. Imports fell 8.9 percent while government spending was up
The GDP data come a day after the bureau said Israel's
annual inflation rate eased to 0.7 percent in April from 0.9
percent in March.
(Reporting by Steven Scheer; Editing by Catherine Evans)