(Recasts with 2016 data, adds details)
By Steven Scheer
JERUSALEM Dec 29 Israel's economy rebounded in
2016, growing 3.8 percent on the back of stronger exports,
consumer spending and investment, although slower growth is
expected in 2017.
The provisional growth estimate from the Central Bureau of
Statistics on Thursday was higher than the 2.5 percent growth
rate in 2015.
Earlier this week, the Bank of Israel raised its 2016
economic growth estimate to 3.5 percent from 2.8 percent.
The central bank sees a slowdown next year to 3.2 percent
and growth of 3.1 percent in 2018.
Just a few months ago, 2016 was shaping up to be quite weak
for Israel's economy, especially when first-quarter growth was
initially estimated at an annualised 0.8 percent. Along with
uncertainty in financial markets following the Britain's Brexit
vote, the Bank of Israel in June cut its 2016 economic growth
forecast to 2.4 percent from 2.8 percent.
It also had trimmed its 2017 estimate to 2.9 percent from 3
percent, although policymakers blamed the weak economy on a
decline in exports in just a few large companies.
But first-quarter growth was ultimately revised up to an
annualised 3.2 percent, followed by a 4.9 percent spurt in
subsequent three months.
Even though the pace of growth has picked up, policymakers
have indicated the central bank's benchmark interest rate is
likely to stay on hold for the time being, since the annual
inflation rate remains negative at -0.3 percent in November and
is not expected to reach the government's 1-3 percent target
until late 2017.
The Bank of Israel's own economists project a 15 basis point
rise in the fourth quarter of next year to 0.25 percent.
"The picture being conveyed to us at the time is that the
economy continues to grow at a solid pace and the labour market
is strong, while the inflation environment remains very low,"
Bank of Israel Governor Karnit Flug said on Monday after the
bank held rates for a 22nd straight month.
After falling in 2015, exports -- which account for about 32
percent of Israel's economic activity -- grew 3 percent in 2016.
Private spending, which has been underpinning the economy of
late, grew 6.1 percent while investment in fixed assets bounced
11 percent after a stagnant 2015.
The central bank expects a moderation of private spending
but stronger exports in 2017.
For the third quarter, the Central Bureau of Statistics
revised growth to an annualised 3.4 percent from a preliminary
estimate last month of 3.2 percent on higher private spending
and investment and a smaller decline in exports.
The shekel gained to 3.848 per dollar after the data
was issued from Wednesday's close of 3.86.
(Reporting by Steven Scheer; editing by John Stonestreet and