Israel’s economy will grow 7.1% in 2021: Ministry of Finance

Israel’s economy will show growth of 7.1% by 2021, reflecting the country’s rapid recovery from the coronavirus pandemic, the Finance Ministry said on Monday.

GDP will continue to grow another 4.7% in 2022 as private consumption and tax revenues continue to rise. The ministry had previously forecast 5.1% growth this year.

The model takes into account dealing with the fourth wave of the coronavirus without severe restrictions on economic activity, the Finance Ministry said.

In 2020, under the shadow of the global crisis, Israel’s economy contracted 2.4% less than expected, after growing 3.8% in 2019. That loss could already recover by 2022, the Treasury said.

During the second quarter of 2021, after Israel reopened after its third lockdown, GDP grew by a whopping 16.6% at an annual rate, as private consumption returned to pre-crisis levels and services exports high-tech increased. Growth in the third quarter was more moderate, while inflation increased and capital markets reached record levels, the finance ministry said.

Illustrative photo of Israeli money (credit: MARC ISRAEL SELLEM)

Private consumption, which fell by a strong 9.2% in 2020, is recovering this year at a rapid pace of 13.1% and is expected to continue growing by 7.5% in 2022. Export growth continued, mainly high-tech, as well as some recovery in tourism in 2022.

Tax revenues have grown 25% this year and are expected to exceed expectations for 2021 and 2022. The rising tide in the housing and capital markets, as well as the existence of a high-tech group, contributed significantly to tax revenues. the ministry said. said.

The consumer price index has increased 2.5% over the last 12 months. Inflation is expected to be 2.8% in 2021 and 2.1% in 2022, slightly higher than previous forecasts but within the government’s targets. The strong shekel, currently trading at NIS 3.10 per dollar, is helping to mitigate some inflationary pressures.

On the other hand, employment figures continue to improve, with a global unemployment rate reaching 7% in October, compared with 7.9% in September.

The number of unemployed Israelis, excluding those on unpaid leave for coronavirus-related reasons, improved slightly to 5.2%.

Employment figures improved rapidly between April and July, when the economy began to reopen, but had stalled somewhat in August and September, raising concerns about the recovery. However, it now seems more likely to attribute that setback to factors related to the holiday season and Delta variant fears.

There were 143,274 jobs available in Israel in October, compared with 138,113 in September, CBS said.

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