Israeli economy expanded estimated 4.8% in 2011

Statistics bureau reports GDP per capita probably climbed 2.9% to $31,100.

By NADAV SHEMER

DECEMBER 29, 2011 17:31

Stanley Fischer at press conference in Jerusalem_311 (photo credit: Reuters) — Stanley Fischer at press conference in Jerusalem_311

(photo credit: Reuters)

The Israeli economy grew 4.8 percent in 2011 despite a gradual slowdown as the year wore on, according to a preliminary report released Thursday by the Central Bureau of Statistics.

Economic growth is still outpacing most advanced economies, which are forecast by the International Monetary Fund to grow an average 1.6% this year.

GDP per capita probably climbed 2.9% to $31,100, unchanged from 2010. But growth slowed to an annual rate of 3.5% in the third quarter, following the 3.7% rate recorded in the second quarter and 4.8% in the first.

In November, the Organization for Economic Cooperation and Development downgraded its 2012 economic growth forecast of the 34-nation bloc to 1.6% from its May forecast of 2.3%.

It cut Israel’s 2012 growth forecast to 2.9%, down from 4.7%.

But Bank of Israel Governor Stanley Fischer expressed optimism Thursday, telling Army Radio that as long as a disaster is averted in Europe, the situation in the United States is kept under control and the Israeli economy is managed responsibly, Israel will emerge from 2012 with the average growth rate of the past three decades.

He said it was his belief that the euro zone would not collapse as a result of the ongoing sovereign-debt crisis and that its 17 member states would all remain in the bloc.

Fischer said he thought during the year that “the Europeans were prepared to let one or two countries quit the euro. But when they realized the repercussions, they decided to try and save the bloc as is.”

Most of the data released by the statistics bureau on Thursday in its preliminary national accounts estimates for 2011 revealed healthy growth.

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Exports of goods and services advanced 4.5% in 2011, after gaining 13.4% in 2010, the report said. Investment in fixed capital climbed almost 16%, with the biggest increases in machinery and equipment and residential and nonresidential construction.

Consumer spending rose 4%.

“We will see a moderation of growth in the fourth quarter that will continue through 2012,” said Modi Shafrir, chief economist at the Tel Aviv-based I.L.S. Brokers. “One of the main factors that will impact on 2012 will be what happens in Europe because 30% of our exports go there. Even if Europe doesn’t fall apart, there will be a recession.”

Unemployment fell to 5.6% in 2011 from 6.7% last year, the statistics bureau said.

The shekel has weakened about 7.7% against the dollar this year, headed for the worst performance since 2001.

Bloomberg contributed to this report.