It’s a good year: The rise of 4.4% per capita GDP along with negative inflation over the past 3 years is demonstrated by a national buying spree with record car purchases, real estate deals and vacations abroad for Israelis.
By Zeev Klein
The past three years have seen Israel’s per capita GDP rise by a total 4.4%, along with negative inflation of 0.8% – which together mean a dramatic increase in the quality of life in Israel, figures published by the Bank of Israel show.
According to the bank data, the past three years have seen a record number of close to 1 million new car purchases and the purchase of a record number of real estate investment properties and new homes, as well as record numbers of vacations abroad, with some 4 million Israelis jetting off to foreign destinations annually.
Bank of Israel economists noted that flourishing consumption, coupled with negative inflation, enabled economic developments such as reduced gasoline and diesel prices, although that trend reversed in 2017. They noted further that the shekel gaining strength against the U.S. dollar at home while elsewhere in the world the dollar dropped against the euro contributed to Israelis’ purchasing power.
The central bank says that the positive side of the macroeconomic changes and the rise in per capita GDP reflect the economy’s improved trade conditions, in which export prices are rising compared to import prices. According to economists, this improvement is largely due to external factors – lower energy prices and a changed dollar value – and to a lesser extent to local influences, primarily the strong shekel.
The Bank of Israel added that improved trade conditions and a higher per capita GDP were allowing increased consumer consumption as well as an opportunity to increase savings. However, in recent years, Israelis have put most of the new economic potential into buying more things, while stretching their credit to new limits. The easy profits banks make on credit are not necessarily easy for private households, but credit has become more readily available and banks are highly motivated to sell their “cheap money.”
View original Israel Hayom publication at: