By Steven Scheer
JERUSALEM Feb 16 Israel's economy shot up in
the final three months of 2016 and looks set to have grown
annually by 4 percent, easily outstripping the central bank's
It came on the back of robust exports, but also increased
On an annualised basis, gross domestic product soared 6.2
percent in the fourth quarter, the Central Bureau of Statistics
said on Thursday, as it also revised up the annualised
third-quarter 2016 growth estimate to 4.2 percent from 3.6
Growth for the whole year should now be 4.0 percent, the
bureau said, up from its previous 3.8 percent estimate and well
ahead of the Bank of Israel projection for 3.5 percent, itself a
December upgrade from just 2.8 percent.
Combined with higher-than-expected inflation data on
Wednesday, the strong economic growth numbers could push the
bank to raise interest rates at a faster pace than it currently
The central bank's own economists forecast a 15 basis point
rise in the benchmark rate, currently 0.1 percent, and another
quarter point rise in 2018.
But one policymaker, according to minutes of rate
discussions, believes that total - 40 basis points - over the
next two years is lower than what will actually come.
Last week, Bank of Israel Governor Karnit Flug said of the
bank's rates estimate: "It's a forecast. Not a commitment"
The year had started off very weak, with a preliminary
first-quarter 2016 estimate at just 0.8 percent - leading the
central bank and others to trim their full year forecasts to 2.4
percent. But the data were revised up sharply as exports rose
and the economy grew strongly the rest of the year.
In the fourth quarter, private consumption rose 3.5 percent
in the quarter, up from 3.1 percent growth in the third quarter.
Exports, which account for more than 30 percent of economic
activity, gained 11.2 percent after a slight decline in the
Government expenditure increased 2.3 percent while
investment in fixed assets, led by residential building,
increased 7.4 percent in the quarter.
Excluding public sector spending, the economy grew an
annualised 7.8 percent in the quarter.
The GDP data follows the first sight of inflation since
Israel's annual inflation rate moved to 0.1 percent in
January after 28 months of falling prices, although the rate
remains below the government's 1-3 percent target range.
The central bank expects inflation, which has been held down
mainly by low energy costs, to reach 1 percent by the end of
(Reporting by Steven Scheer; Editing by Ari Rabinovitch/Jeremy