GDP numbers surprise on the upside

ISRAEL - In Brief 16 Feb 2021 by Jonathan Katz
In 2020, the GDP contracted by 2.4%, less than originally expected. Q420 was especially strong and actually expanded by 6.3% saar (we had expected contraction), but closer to + 2.7% without taxes on imports. December witnessed a huge increase in vehicle imports (which are heavily taxed) due to higher taxation in January 21. But other sectors looked strong as well, with investments in machinery and equipment up sharply. Hi-tech service exports increased in Q420 while merchandise exports declined. We had expected a contraction in Q420 due to the renewed closure. Nevertheless, consumption of non-durables increased by 9.7% saar in Q420. Israel’s economy contracted by 2.4% in 2020 and by 4.1% per capita, which is relatively modest compared to many EU countries and similar to the US. The level of GDP in Q420 is below that of Q419 by only 0.4%. These are relatively positive GDP numbers, and better than expectations.

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