Israel’s economy continued to demonstrate resilience and growth in the second quarter of the year, with the Central Bureau of Statistics (CBS) revealing a solid GDP growth rate of 3%. This announcement, made on Wednesday, aligns closely with the Bank of Israel’s annual forecast and outperforms the Ministry of Finance’s earlier projection of 2.7% growth by year-end. Despite economic uncertainties, the nation’s performance surpassed the OECD’s estimated year-end growth rate of 2.9%.

Though the 3% growth rate underscores a consistent upward trajectory, it is lower compared to the first quarter of this year. As for the calculation of GDP per capita, it expanded by a commendable 1.1% increase, which is in parallel to the growth in private consumption expenditure, that also rose by 1.1%.

Delving into the impact of inflation and interest rate changes on consumer behaviour, annualized private consumption spending witnessed a 1.9% uptick. However, a slight dip of 0.6% has been registered in private consumption.

Among discretionary spending categories, a decline of 11.2% was observed in the consumption of essential products like fashion, footwear, entertainment, and personal items. The most significant contraction was seen in private vehicle expenditures, which plummeted by 14.5% on an annual basis.

The GDP reading comes after Israel’s inflation rate was released on Tuesday, which fell more than expected to 3.3% in July, a 16-month low, from 4.2% in June.

The CBS’s international comparison of GDP growth from Q1 to Q2 2023 showcased Israel’s prowess on the global stage. With a quarterly growth rate of 0.7%, Israel outperformed several developed nations that either saw no growth or experienced minimal expansion. The United States, for instance, achieved a growth rate of 0.6%, while the United Kingdom managed only 0.2%. Meanwhile, Germany reported stagnant growth, and Austria’s economy contracted by 0.4%.

Despite Israel’s overall positive economic performance, the figures unveiled by the CBS also spotlighted a weakness in the high-tech sector. A notable decline of 19.4% in investments within the information and communication technology sectors, particularly in machinery and equipment, suggests some challenges in this crucial industry.

As Israel navigates the complex landscape of global economic shifts, the nation’s consistent growth trajectory reflects a promising outlook. While challenges in specific sectors remain, the diversified economy continues to adapt and evolve, bolstering its position among global economic players.