Economic Analysis - Growth Cooling In 2017, But Fundamentals Remain Strong - SEPT 2017

BMI View: Real GDP growth will slow in 2017 following a rapid acceleration in 2016, as the recent spike in investment begins to ease . Nonetheless, investment fundamentals remain strong, and private consumption growth will rebound in the coming quarters, supported by a tight labour market and accommodative fiscal policies.

Q117 GDP data supports our view that economic growth will slow in Israel in 2017, following a very strong 2016. Real GDP growth came in at 4.0% y-o-y in Q117, down from 5.7% y-o-y in Q316 and 4.3% y-o-y in Q416. We expect economic activity to decelerate further over the coming quarters, which we believe will take real GDP growth to 3.5% by year-end. Nonetheless, this modest growth slowdown does not affect our view that the Israeli economy continues to boast strong fundamentals, and will outperform other developed economies over the coming years.

Private Consumption Slowdown Will Not Last

Macroeconomic Backdrop Still Robust Despite Growth Slowdown
Israel - Breakdown Of Real Quarterly GDP, % chg y-o-y
Source: Central Bureau of Statistics, BMI

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