Trade Review
The
available data Indicates of economic
growth is slightly slow in Israel and
activities show that this accelerated in
2000. In present year, the state of the
economy and manufacturing even declined,
but their level remained higher than in
the first half of the year, reinforcing
the view that since 1999 an economic
recovery has been under way. National
Accounts figures show that the level of
all uses rose during 1999 more than did
that of GDP. Thus, the rapid expansion of
imports of goods and services, whose
response to changes in aggregate demand
should be faster than that of GDP, is
apparently another indication of economic
revival. Exports of goods and services
accelerated between every quarter, so that
by 1999 they were 10 percent higher than
in 1998, the continuous expansion of
investment since 1998 also persisted,
mainly in equipment (ships, planes, and
Intel) and inventories. Private
consumption also increased relatively
rapidly, especially in 1999, so that per
capita consumption rose; public
consumption grew slowly, except in 1999
(when the general elections were held). On
the sources side, by contrast, GDP and
business-sector product, which had fallen
in 1999, expanded once again, although
their level in 1999 was only 2 percent
above that of 1998 (thus, per capita
product shrank, and the gap between actual
and potential GDP appears to have widened,
the annual growth rate of the latter being
estimated at 4 percent). Imports of goods
and services, which declined in 1998, rose
rapidly throughout 1999, the steep
increase in capital goods being
particularly prominent. The results of the
Bank of Israel's quarterly Survey of
Companies show that the resurgence of all
the principal industries continued, even
strengthening in 1999. Thus, starting in
1999 the activity of firms involved in
manufacturing, commerce, transport and
communications, and hotels expanded, and
for the first time the decline in
construction activity was checked. In the
first three quarters of 1999 the output of
manufacturing firms grew, after six
successive quarters in which it had
declined, and their exports increased,
too. All the principal industries
indicated that they expected the high
level of activity to continue.
Nonetheless, slack domestic demand
remained the main constraint preventing
the more rapid expansion of output. All
the indicators in Table 1, except
construction, show that activity
accelerated in 1999, and for the first
time they all rose by more than 20
percent. Manufacturing output data
indicate a steady rise since 1999,
alongside a relatively rapid increase in
the export industries (electronic
equipment, machinery and electrical
equipment, and transport vehicles), while
the output of the other industries, which
produce mainly for the domestic market,
fell or rose slightly.
In
construction, beginning in
1999 and for the first
time in years, there are
some indications that
demand is expanding,
although other indicators,
including construction
investment, show that the
decline is continuing. An
analysis of the trend of
the principal indicators
of construction show that
in 1999 and 1999, for the
first time, there was a
slight rise in the rate of
growth of residential
starts (2 percent in each
quarter), all of it in
government-initiated
construction. Data on
residential completions
also point to a recovery:
in 1999 and 1999 the
number of units whose
construction was completed
rose (by 16 and 9 percent
respectively), the main
contributor to this trend
being the business sector.
Other indicators of
increased construction
activity are the greater
number of persons taking
mortgages and the sharp
rise in apartment sales by
the ten largest
construction companies in
1999. On the other hand,
total investment in
construction fell in each
quarter of 1999
(seasonally-adjusted
figures), especially in
1999, most of it in
non-residential
construction, and
construction time grew
longer. There were signs
of recovery in the other
industries, too. The index
of the revenue of all the
commerce and services
industries (based on VAT
data, seasonally adjusted)
was 5 percent higher on
average in the period
reviewed than in the
equivalent period in 1998.
The number of tourist
entries, which had fallen
steadily in the previous
two years, reaching a
record low in 1999
(seasonally-adjusted
figures), began to rise
subsequently, and by the
end of the period reviewed
it was 35 percent higher
than in the equivalent
period in 1998. An
analysis of the trend of
tourists entering the
country by air indicates
that this has been rising
for about a year, as the
average monthly growth
rate was 3.3 percent in
July-September, and 2.5
percent in October and
November.