The Israeli economy grew in the second quarter at an exceptional annual rate of 5.1%. This compared to growth of 2.7% in this year's first quarter, and 3.1% in the final quarter of 2012.

National accounts estimates published Sunday by the Central Bureau of Statistics show that the sharp rise in GDP for the second quarter primarily reflect the sharp rise of 6.7% in the annual rate, which was recorded in private consumption and the large rise of 8.3% in public expenditures, reflecting the costs of government. Exports of goods and services grew during the first three months of the year at an annual rate of 1.2%, whereas investments in fixed assets during this period decreased at an annual rate of 6.3%.

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Throughout the first half of the year, the growth figures are less impressive. During this period, the economy grew at an annual rate of 3.4%, compared with growth of 3.5% during the last half of the previous year, and 3.1% in the first half of 2012.

Private consumption rose in the first half of the year at an annual rate of 5.1%, following an increase of 2.1% in the last half of the previous year, and an increase of 4% in the same period of 2012.

Private consumption per capita, which is considered a reliable index for measuring changes in living standards in the economy, increased in the first half of the year at an annual rate of 3.1%, following a nominal increase of 0.2% during the second half of 2012.

The growth of the CBS should be treated with great caution. This is due to the fact that the CBS updates national account estimates, which include growth estimates, at a fairly high rate and for a long time. The research department of the Bank of Israel has tested the quality of the CBS updates, and in a study published two months ago, wrote, "You cannot treat initial growth estimates as final data, and you must track the changes made to them over time."

The CBS itself suggests that its national accounts estimates be interpreted with great caution. In its announcements, the CBS noted, "These findings should be treated carefully, because we know there is relatively high irregularity in economic statistical series in the country. This is reflected in strong fluctuations in the quarterly data that makes it difficult to analyze the issue within various time series, and especially in identifying turning points in economic activity.”

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