Recent Economic Developments, 128

08/11/2010
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The Economy and Economic Activity

Recent Economic Developments, 128

Overview:

In the review period, from May to August 2010, the Israeli economy continued its recovery, alongside signs that some of the world’s major economies were recovering slower. The recovery was reflected in a rise in the State-of-the-Economy Index of 4.4 percent (in annual terms, Figure 1.1). The continued growth in demand throughout most of the review period contributed to the accelerated growth of GDP in the second quarter by 4.6 percent (and of the business-sector gross product by 5.3 percent),1 as well as to the continued growth of imports. The rapid growth of private consumption and exports, and the beginning of the recovery of investments in fixed assets, point to the progress of the economy in extricating itself from the recession. The moderation of concerns about the trickling of the debt crisis in Greece to other countries in the Euro Bloc, in the wake of the establishment of an assistance fund for European countries that have encountered financial difficulties, has, in the review period, partially restored confidence in the markets. This development is reflected in curbing the decreases in the public’s asset portfolio, in halting the increases in the risk indices of the markets, in a slight depreciation of the nominal effective exchange rate, and in a recovery, to some 1 National accounting data are in annual terms, and relate to the second quarter of 2010.

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