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Country Profiles

Israel and the Palestinian Territories - Economy

Whitaker's Almanack Version

Financial Outlook

Israel’s economy expanded by 3.3% in 2013, the slowest year for growth in a decade, according to the country’s Central Bureau of Statistics, and down from 3.4% in 2012. The Bureau said that weaker than expected export growth was the main factor. Around 25% of the annual GDP growth stemmed from Israel’s increased natural gas production. In December 2013 the government adopted a formula governing public spending growth, with the aim of sharply curbing that growth. As a result, the state budget will grow at a rate of 2.5–2.6% in coming years, down from around 4% under the previous formula. In a December 2013 report, the IMF endorsed the central bank’s policies but warned that the Bank of Israel should refrain from further interest rate cuts and be prepared to raise rates if economic growth exceeds forecasts or pressure on the shekel eases. Israel’s base lending rate has been falling since 2011, and at the end of 2013 it stood at just 1%. The IMF forecast economic growth of 3.25% in 2014.

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