New Review Raises: Last Quarter, Growth Smashed Forecasts to 4.8% Annual Rate • Corona Epidemic Threats Sleepy Inflation • Cheapest Production from China Could Change to More Expensive Production

• Green screens in Tel Aviv // Photo: Joshua Yosef

 The Israeli economy is showing strength against major economies in the world - according to a macroeconomic survey by Ofer Klein, head of the Economics and Finance Department at Harel Insurance and Finance. However, in light of the global weakness, Klein's forecast for growth in Israel in 2020 remains 3%.

Initial UK growth figures for the fourth quarter of 2019 were weak with zero growth, with only a rapid increase in inventories preventing it from posting negative growth. In Germany, GDP was weak, with only 0.1% annual growth, and the Germans were a negative weighting on the growth of the Eurozone as a whole. In Japan, initial growth figures for the last quarter of 2019 were catastrophic, with a 6.3% annualized contraction in GDP.

On the other hand, in Israel the initial growth figures for the last quarter of 2019 were better than the early estimates, with strong annual growth of 4.8%, and after deduction of taxes on imports, growth was a good pace of 3.3%. Following the strong figure and upward third quarter data, 2019 annual growth was revised to 3.5%.

In Klein's estimation, renewed interest in inflation may soon emerge, in part due to the Corona virus. It should be noted that China is Israel's second-largest import country, at $ 6.7 billion in 2019, accounting for 8% of total imports. "If China's export prices are closed (or plugged) even a month from now, this will lead to a decrease in inventories and even a shortage of certain products, and will require finding alternatives that are likely to be higher prices," Klein argues. He said there is also a high probability that the Bank of Israel will reduce interest rates in the coming months.