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17.06.2012
 
Recent Economic Developments: JanuaryApril 2012
 
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  During the period reviewedJanuary to April 2012business activity in Israel continued to grow at a rate below the economy's long term growth rate (Figure 1).
  The moderation of growth in business activity was to a large extent the result of the crisis in the eurozone and the slowdown in global growth. In addition, activity in manufacturing slowed, as a result of the decline in the export of goods at all levels of technology intensity.
  The moderate growth in economic activity was reflected by the stability in the number of employees, employee posts and job vacancies, and the decrease in the real wage of Israelis during the period.
  The CPI increased by 1.3 percent during JanuaryApril. During the last 12 months, inflation totaled 2.1 percent, near the center of the target range.
During the period reviewedJanuary to April 2012business activity in Israel continued to grow at the moderate rate to which the economy had converged during the second half of 2011 (Figure 1). During the first quarter of 2012, GDP grew by 3.0 percent, below its long term growth rate and slightly below the rate in the last two quarters of 2011 when growth was already lower than its long-term average. Growth in business sector output during the first quarter slowed markedly relative to the second half of 2011 and stood at 2.8 percent. As in the previous reviewed period, the moderation of growth in business activity during the current period was to a large extent the result of the crisis in the eurozone and the slowdown in global growth. In addition, activity in manufacturing slowed, as a result of the decline in the export of goods at all levels of technology intensity. Nonetheless, the level of exports remained high in historical terms.
The stability in the number of employees, employee posts and job vacancies, and the decrease in the real wage of Israelis during the period reflect the moderate growth in economic activity. The slow rate of growth was also reflected in the rate of tax collection, for both direct and indirect taxes, which remained relatively constant since the beginning of the year.
Since the beginning of the year, there has been an increasing amount of data indicating a recovery in the US economy; however the fiscal crisis in some European countries has deepened, which was reflected in the deterioration of real and financial activity in those countries and in the eurozone as a whole. Growth in Europe was stagnant and employment figures reached historic lows. During the period reviewed, ratings agency S&P lowered the credit rating of nine European countries, including France. In addition, fears increased that the austerity programs will not manage to lift the countries in crisis onto a path of growth, and global growth forecasts for 2012 and 2013 were revised downward.
Developments in domestic and global financial markets were marked by contrasting trends during the period. The developments in the first quarter of the year were quite positive, as stock indices rose in Israel and abroadcontinuing the positive trend which began at the end of 2011. But since the beginning of April, and continuing in May, as a reaction to the growing concern in global financial markets over Spain's debt crisis, there was a negative turnaround in the upward trend and stock indices fell. The reaction of the Israeli market was similar, though a bit delayed. The recovery in stock market indices began in March and the fall in local financial markets, as a reaction to the global events, began only in May. The decline in May erased the entire increase in the local stock market indices since the beginning of the year
The CPI increased by 1.3 percent during JanuaryApril and the seasonally adjusted CPI increased by 1.2 percent relative to the previous period. In April, inflation over the previous 12 months reached 2.1 percent, near the center of the target range of 13 percent (for both the unadjusted and seasonally adjusted data).