Economic slowdown continuing, Finance Ministry says

Next treasurer, rumored to be Yair Lapid, will face an uphill and unpopular task

By Stuart Winer

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10 March 2013, 6:14 pm

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Stuart Winer is a breaking news editor at The Times of Israel.

Head of the Yesh Atid political party Yair Lapid speaks at an economic conference in December 2012. Lapid is reportedly negotiating to be Israel's next finance minister as Treasury figures for January 2013 show a continuing economic slowdown. (photo credit: Yossi Zeliger/Flash90)

With a new coalition reportedly waiting in the wings, the next finance minister will have a full plate of gloomy economic indices to contend with, a monthly report released Sunday shows.

Figures published by the treasury in its monthly “Red Lights” report contend that Israel continues to suffer an economic slowdown into 2013.

Although the stock exchange showed slight growth, trade exports were down by 2.8 percent in January. Export of services was down by 4.5% in December while labor force participation dropped by 0.3%, according to the published figures.

The Finance Ministry blamed the slowdown on November’s eight-day military operation in Gaza. Another factor was the general global recession, the ministry said.

If Yesh Atid’s Yair Lapid is indeed the next finance minister he will face the challenging news that January saw a drop in the number of people seeking to buy homes. Lapid made affordable housing a battle cry of his Yesh Atid party’s campaign for the Knesset. The ministry figures have shown a general drop in the number of building starts during last year, although last month there was a slight increase, according to the report.

January saw a drop in the number of people seeking homes, but a slight increase in the number of housing starts. Lapid made affordable housing a battle cry of his Yesh Atid part’s campaign for Knesset.

The Finance Ministry’s “Red Lights” report gives a snapshot of the key economic figures and the status of Israel’s economy.

Growth rate in the last quarter of 2012 was just 2.5%, continuing a trend throughout last year that showed growth down to 2.9% in the third quarter following a showing of 3.1% in the second quarter and 3.9% in the first quarter. The slowing down of the economy is also holding down inflation and the consumer price index dropped by 0.2% in January. Inflation for the last 12 months was just 1.5%, below the government target of 2% for the year.

Overall, economic growth has been slowing down over the previous three years. Central Bureau of Statistics figures quoted in the ministry report showed the economy grew by 3.1% in 2012, compared to 4.1% in 2011 and 5% in 2010. Gross domestic product per capita went up by 1.2% in 2012 but was 2.7% in 2011, and 3.1% in 2010.