Economy Grows 5.2% in 2005

“It’s good news,” said Leader & Co. analyst Jonathan Katz. “Everyone expected that the Israeli economy is growing rapidly, and it’s apparently growing even more rapidly than people thought,” he said, cautioning, nonetheless, that the quick growth rate could lead the Bank of Israel to tighten monetary policy and continue raising the interest rate.

This is the highest growth figure for the country since the economy grew 7.7% in 2000 and 5.4% in 1996, outpacing GDP growth among the OECD (Organization for Economic Cooperation and Development) member states, which averaged 2.7%. GDP grew 3.6% in the U.S., 3.4% in Spain, and 3% in Canada.

“Former finance minister Binyamin Netanyahu did a good job–reforming the labor market, capital market, the ports, and others–and the government ended up spending less than it expected,” commented Shlomo Maoz, chief economist at Excellence Nessuah, an Israeli brokerage firm.