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JERUSALEM (Reuters) – Israel’s economy contracted a less than expected 2.4% in 2020, with the coronavirus pandemic weighing on consumer spending, the Central Bureau of Statistics said on Tuesday in a preliminary estimate.

© Reuters/Ronen Zvulun People walk around an alley in Jerusalem’s Old City

It was the first time the economy had shrunk since a marginal decline in 2002, but Israel in 2020 outperformed a 5.5% average contraction in OECD countries.

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The economy, which grew 3.4% in 2019, had been expected to shrink 3.3% to 3.7% in 2020 based on government and central bank estimates because of COVID-19.

Growth is expected to rebound in 2021, with the Bank of Israel forecasting a 6.3% rise if Israel’s rapid COVID-19 vaccination pace is maintained.

Despite a third lockdown, the economy grew an annualised 6.3% in the fourth quarter after a 41.5% jump in the third quarter. Analysts on average had projected a 0.5% decline.

In 2020, private spending declined 9.4%, while exports rose 0.6% despite the crisis and a stronger shekel. Imports slid 8.1%, investment in fixed assets dipped 1.5%, while government spending gained 2.9% last year.

(Reporting by Steven Scheer, Editing by Timothy Heritage)

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