The Israeli economy has shown the fastest growth in the OECD after GDP shrank by 2.7% in the first quarter of the year. The Central Bureau of Statistics says that Israel’s GDP increased 6.8% on an annualized basis in the second quarter of 2022. The data defy predictions of a slowdown in the economy after the Israeli economy shrank 2.7% in the first quarter, according to the most current assessment.

In comparison to the second quarter of 2021, Israel’s GDP increased by 7.4%, which is currently the highest growth rate of any OECD nation, surpassing Portugal (6.9%), Spain (6.3%), Canada (4.8%), the US (1.6%), and Germany (1.5%).

On an annualized basis, the GDP per capita increased by 4.5% in the second quarter and by 4.8% in the first half of the year.

According to the Central Bureau of Statistics, the recovery in the tourism, aviation, hotel, restaurant, and transportation services sectors is what accounts for the second quarter’s significant increase.

Exports of goods and services increased 13.9% in the second quarter. Private consumption per capita rose by 8% in the second quarter, on an annualized basis from the first quarter.

The central bank of Israel, projects the economic growth of 5% in 2022 after a more than 8% gain last year. It also sees an inflation rate of 4.5% this year, which is above an official target 1%-3%, but easing to 2.4% in 2023. It has to be mentioned that the inflation rate is still far below Western levels, but with prices rising rapidly, the cost of living is becoming a key issue for parties running in the upcoming general election.

For this reason, economists expect a 0.75 point hike at the upcoming meeting at the central bank instead of a 0.50 point. The last time the officials moved the interest rate by three-quarters of a point was a rate reduction in early 2009. However, the actual hike by at least the same amount took place back in 2022.