Israel's gross domestic product (GDP) shrunk by half-a-percent in the fourth financial quarter of 2008. The drop followed three quarters of progressively slowing growth and is a harbinger of an imminent recession.
A report released by the Central Bureau of Statistics (CBS) on Monday indicated that Israel's GDP declined by 0.5 percent in annual terms in Q4. GDP growth has been slowing all year, with the relative change in GDP for Q3 standing at 0.9, Q2 at 3.2 and Q1 at 4.6. A successive quarter of negative numbers, however, would formally be defined as the start of a recession. Such a drop is deemed likely due to decreasing consumer confidence, as indicated by the latest figures.
Personal consumption decreased by 28 percent in the second half of 2008, after it had increased by 24.7 percent in the first half. Consumers bought 56.6 percent less cars, 15.2 percent less furniture, and 4.4 percent less appliances, according to the CBS. Exports and investments also fell in the second half of 2008 by more than 6 percent and more than 5 percent, respectively.
The Tel Aviv Stock Exchange (TASE) opened over 2 percent lower on Tuesday due to sharp falls on Wall Street during Monday's trading. The Dow Jones was at a level unseen since 1997.
Israel's annual GDP has increased steadily since a low of -0.7 percent in 2002, reaching 5.4 in 2007. The largest single increase was recorded in 2004, when the GDP increased by 5 percent over 2003 (1.8).