The GDP of Israel keeps on growing, however when comparing on an international level, Israel’s GDP growth in 2010 seems a bit less impressive but still above average.
According to the Central Bureau of Statistics of Israel, Israel showed a growth rate in 2010 of nearly 4.6% in constant prices, compare to 2009. In 2009 Israel grew by only 0.8% and in 2008 it grew by 4.2%.
In the fourth quarter the GDP grew by 7.7% on a yearly scale, after it rose by 4.6% in third quarter, by 5.4% in second quarter and 5.1% in first quarter of 2010.
On an international scale however, the growth rate of Israel in 2010 is less impressive, seeing that Israel has different characteristics (see here for more) than other OECD countries mainly in regards to population growth rate: during 2010 Israel’s population grew by 1.9%, while on average other OECD countries growth rate was only 0.5%. Therefore, the GDP growth rate per capita of Israel in 2010 was only 2.7% compare to an average OECD of 2.3%.
The GDP per capita in terms of PPP was 84% of the average GDP per capita of OECD countries.
This shows that Israel is a rising economy; however in 2010 its GDP growth rate wasn’t much higher than other OECD countries.
In the graph below shows the GDP of Israel on a quarterly basis (constant prices) and the changes of the Bank of Israel basic interest rate 2008-2010:
There is an old economic paradigm that when the inertest rates rise, they adversely affect the growth rate of the economy in order to keep the inflation rate from rising.
In reality, it seems that up to now the attempts of Bank of Israel in containing the rising inflation was futile, but at least these attempts didn’t seem to adversely affect the GDP growth rate in the fourth quarter.
Want a more detailed analysis on Israel’s economy? IBR can do it for you…read here for more
