The Israeli economy contracted by 1.7% in the first quarter - On an annual basis: 6.5%

The Israeli economy contracted by 1.7% in the first quarter of 2021, relative to the fourth quarter of 2020. The decline in GDP, according to a first estimate by the Central Bureau of Statistics, was mainly due to the consequences of the corona crisis - the sharp closure in January and February. On an annual basis, there was a decrease of 6.5% in GDP compared to the fourth quarter of 2020
The negative data for the quarter contradict the early forecasts of analysts, who believed that the Israeli economy would actually continue to recover after emerging from the corona crisis. For example, Leader Capital Markets estimated that there would be a 7% increase in annual calculation in the first quarter due to an acceleration in private consumption and the export of high-tech services. In practice, there was an annual calculation of a 6.5% decrease in GDP (the decrease in the first quarter if the rate of decline is for an entire year) compared to the fourth quarter of 2020. Simultaneously with a decrease in economic activity due to the corona crisis, there was also a sharp decrease , Which mainly affected tax revenues.
Due to the limitations of the corona, there was a decrease of 3.2% in private consumption in Israel in the fourth quarter compared to the previous quarter on an annual basis. Public consumption also fell sharply by 24%, most likely due to a reduction in the volume of aid to the Corona programs.
The decrease in private consumption per capita reached 4.7% on an annual basis compared to the fourth quarter of 2020. Expenditure on current consumption (eg food products) actually increased by 9.1%, but the decrease was mainly recorded in durable goods, such as vehicles.
The export item continued to be particularly strong in Israel and increased in the first quarter of 2021 by 22.7% on an annualized basis. Exports of services increased by 22.7% while exports of goods increased by 27.1%.
The decline in the first quarter of 2021 compared to the first quarter of 2020 now amounts to a contraction of 0.5%. In an international comparison, Israel is in a good place in the middle. In France, for example, GDP jumped by 1.5% in the first quarter, while in countries such as Austria and Germany, GDP contracted by 2.7% and 3%, respectively.

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